Abstract:

ESG has emerged as a pivotal investment strategy in global capital markets and a mainstream evaluation criterion for corporate sustainable development capabilities. However， significant divergence persists in ESG ratings assigned to Chinese listed companies by domestic and international rating agencies， which may distort capital market valuations and exert tangible operational impacts on corporate decision-making. Based on the data of Chinese A-share listed companies from 2018-2023， the impact of ESG rating divergence among eight representative domestic and international rating agencies on corporate tax avoidance decisions is empirically examined， and further the underlying mechanisms is analyzed through financing constraints effects， information noise effects， and performance pressure channels. It is found that first， ESG rating divergence significantly increases the degree of corporate tax avoidance. Second， mechanism analysis shows that ESG rating divergence affects corporate tax avoidance through increasing external financing constraints， intensifying information asymmetry and raising short-term performance pressures. Third， heterogeneity analysis shows that the positive relationship between ESG rating divergence and corporate tax avoidance is weakened when firms have strong internal and external financing ability， high quality of internal control and more attention from external analysts， while the positive relationship is reinforced when capital market performance expectations pressure and investor sentiment are higher. Furthermore， extensive analysis finds that corporate tax avoidance caused by ESG rating divergence can improve short-term corporate performance， but is detrimental to long-term corporate performance. The enhancement of corporate ESG report reliability and the implementation of mandatory ESG disclosure frameworks both help to mitigate e the adverse operational impacts stemming from ESG rating divergence. Finally， targeted recommendations tailored to three key stakeholder groups are presented： regulators， rating agencies， and corporations. The unintended consequences of ESG rating divergence on corporate financial decision-making is systematically revealed， and useful references are provided for regulators to formulate ESG standards， rating agencies to improve ESG rating system and enterprises to implement the ESG development concept.

Key words: ESG rating divergence, corporate tax avoidance, financing constraints, information asymmetry, performance pressure