The relationship between environment, social, and governance (ESG) and corporate performance has been extensively explored in academic circles. However, the conclusions are mixed. Early studies often started from the theory of shareholder supremacy and principal–agent, suggesting that a company’s social responsibility is to increase profits ^[1][5] (pp. 173–178). These scholars argued that ESG activities have strong externalities that can result in additional costs for companies. Additionally, since most ESG information is self-reported by companies, managers may be tempted to inflate data through opportunistic behavior to improve their ESG ratings. Therefore, ESG activities may not be conducive to improving corporate performance and could even harm the interests of shareholders ^[2][3][4][5][6,7,8,9].

The ESG concept has gained popularity, replacing the goal of maximizing shareholder profits with maximizing stakeholder benefits. Increasing numbers of academics now believe that good ESG performance can enhance corporate performance. According to stakeholder theory, a company is a collection of multilateral contracts between essential stakeholders ^[6][10]. Stakeholders contribute the resources necessary for a company’s growth, and meeting their expectations is crucial for a company’s growth prospects. Corporate responsibility for ESG is not merely a cost, a constraint, or a charitable behavior; it can also provide an opportunity for innovation and competitive advantage ^[7][11]. A vast number of studies have shown that the non-financial information provided by ESG is highly valuable to various stakeholders. When a corporation takes on ESG responsibility, it can satisfy the needs of both internal and external stakeholders, leading to enhanced performance. Internal stakeholders include managers and staff, while external stakeholders consist of government, institutions, customers, and investors.

For internal stakeholders, companies that exhibit superior ESG performance have a higher level of governance and a more comprehensive management system ^[8][12]. As a result, they have a greater ability to organize their employees, tap into their full potential, and utilize company assets more efficiently. Essentially, they are better equipped to generate economic results ^[9][13]. Additionally, good ESG performance can enhance employee engagement, foster loyalty, and attract high-quality human resources ^[10][14].

For external stakeholders, better ESG performance can improve a company’s image and reputation, signaling trustworthy and ethical business practices to the government, investors, and the public ^[11][15]. As a result, companies with good ESG performance can earn the trust and support of external stakeholders, accumulate moral capital, and enhance their legitimacy ^[12][16]. With a strong reputation, companies can increase their market competitiveness, generate additional value, and gain extra profits. Additionally, ESG information provides valuable insights not covered by financial indicators, reducing information asymmetry between investors and companies, and encouraging operators to make decisions based on stakeholder interests. This can ease financing constraints and alleviate the contradiction between the supply and demand of funds, ultimately boosting corporate performance ^[13][17].

Some scholars suggest that companies with better corporate performance may have a stronger ability to bear ESG responsibilities, indicating the possibility of reverse causality in such studies. However, many studies interpret the relationship between ESG and corporate performance as ESG having a positive effect on corporate performance, despite the potential for reversibility ^[14][22]. Therefore, it is crucial to differentiate between correlation and causation. Ting Jiang ^[15][23] proposes that moderating effect analysis is a crucial approach to establishing causality, as it investigates the richer connections between independent and dependent variables. Although endogeneity cannot be entirely controlled, moderating effect analysis can help identify the causal relationship between independent and dependent variables if such correlations cannot be explained by alternative causal links.

While existing research explore various variables, such as ownership structure ^[16][24], gender of the board of directors ^[17][1], internal and external supervision ^[18][25], and ESG investors ^[19][2], the role of mechanism analysis has not been adequately recognized in many studies ^[15][23]. A company’s ability to attract resources from diverse stakeholders is critical for its continued existence and growth. From a multi-capital perspective, the government provides social capital, the market offers monetary capital, and executives provide human capital, and all these stakeholders have a significant impact on a company’s business decisions ^[20][26]. Using stakeholder theory and examining the government, market, and company perspectives, researchwers aim to investigate the regulatory effects of tax incentives, regional marketization degree, and the proportion of female executives to illustrate the impact of ESG on corporate performance.

There is a lack of relevant studies on the impact of tax incentives on ESG, especially within the context of agriculture and forestry firms. Tax incentives are an essential tool for the government to implement industrial policies and represent a form of “government credit.” The granting of tax incentives by the government can convey a positive signal to external stakeholders, such as banks and investors, suggesting that the company has official certification and implied guarantee with significant potential for development. This reputation effect can encourage stakeholders to invest their confidence and provide financial assistance. As a result, companies with larger tax incentives can maintain good operations in the short run, which may lead to operator inertia and speculation to some extent.

Despite China’s vast land size, there are significant disparities in the level of development between its many regions. The varying levels of regional marketization can lead to different effects of ESG on corporate performance. In regions with a high degree of marketization, the market mechanism is well developed, and companies have better access to resources and policy flexibility. These companies experience fewer financing constraints and have more investment and financing alternatives. Additionally, regions with high marketization tend to have better rule of law and economic development, as well as stricter government and societal oversight of corporations. Therefore, stakeholders may demand that companies in these regions assume greater ESG responsibilities ^[21][27]. In other words, good ESG performance might be viewed as a company fulfilling its responsibilities. This may limit the improvement of stakeholders’ identification with the company, which may not result in significant corporate performance growth.

On the other hand, in regions with low marketization, the level of government control is often inadequate, and the factor markets are more flawed. In such situations, the moral and financial costs of companies not assuming ESG duties are smaller. If a company can still actively undertake ESG responsibilities, it will surprise stakeholders, and the marginal effect of ESG will be more apparent ^[22][28]. This can enhance stakeholders’ recognition and support of the company and drive corporate performance growth. Moreover, a higher degree of regional marketization is associated with a lower degree of information asymmetry ^[23][29]. Stakeholders have more access to information about the company, which means ESG determined based on the company’s own disclosure plays a relatively limited role for stakeholders, particularly investors.

According to the Upper Echelons Theory, executives play a central role in company organization, and their demographic features have a significant impact on the company’s decision making and corporate performance. Gender is typically considered a significant demographic feature variable. The proportion of female executives may affect the relationship between ESG and corporate performance ^[17][1]. However, many papers only discuss the impact of the proportion of female executives on corporate social responsibility ^[24][25][30,31] and rarely explore the moderating effect of the proportion of female executives on the relationship between ESG and corporate performance.

The Feminine Ethics of Care holds that there are gender-based distinctions in moral ethics. Compared to men, women tend to interpret morality as their sense of obligation to others and emphasize a form of caring ethics based on “connection and responsibility.” Based on this idea, the public has much higher expectations for women’s ethical standards than for men’s, which makes female executives face greater social pressure to help companies assume ESG responsibilities ^[26][32]. Furthermore, research demonstrates that female leaders are more capable of driving ESG performance improvement in their companies ^[27][33].

According to Social Role Theory, gender differences in the conventional division of labor are a significant factor in the divergent expectations of the public regarding gender roles. Compared to the “individuality” of males who work outside, women demonstrate more “altruism” in public ^[28][34]. Therefore, companies with a higher proportion of female executives may pay more attention to ESG, be more attentive to stakeholder demands, and be more willing to create more comprehensive value for stakeholders, which can strengthen the impact of ESG on corporate performance. In addition, the proportion of female executives reflects the equality of promotion possibilities between men and women, which can provide insight into the significance of gender considerations in human resource management.