Research on the Impact of Executives with Overseas Backgrounds on Corporate ESG Performance: Evidence from Chinese A-Share Listed Companies

Abstract

As sustainable development gains importance, corporate ESG performance has become a key factor in investment decisions and long-term business growth. Drawing on upper echelon theory and stakeholder theory, this study examines the impact of executives with overseas backgrounds on ESG performance using data from A-share listed companies in Shanghai and Shenzhen from 2010 to 2022. The findings show that: (1) Executives with overseas backgrounds significantly enhance ESG performance; (2) this effect operates through three main channels—promoting corporate green technology innovation, improving the quality of corporate internal control, and enhancing the level of corporate risk-taking—while digital transformation positively moderates the relationship; (3) the effect is more pronounced in non-polluting, manufacturing, capital-intensive, and technology-intensive firms. This study clarifies the internal mechanisms by which executive backgrounds influence ESG outcomes and offers insights into enhancing ESG practices to support China’s “dual carbon” goals.

1. Introduction

High-quality development was highlighted as a core priority in the report of the 20th National Congress of the Communist Party of China, providing strategic direction at both national and corporate levels. As key players in the market economy, enterprises are expected to align with this agenda by addressing the needs of various stakeholders and integrating environmental (E), social (S), and governance (G) considerations into their operations. ESG has thus emerged as a critical framework for guiding sustainable development and enhancing corporate value.

China has taken signifi cant steps in recent years to develop ESG systems and regulatory mechanisms. For instance, in 2022, the State-owned Assets Supervision and Administration Commission (SASAC) released the Work Plan for Improving the Quality of Central SOE-Controlled Listed Companies, which called for the integration of ESG principles into corporate governance. In 2024, the Shanghai Stock Exchange introduced revised Self-Regulatory Guidelines for Listed Companies, laying the groundwork for standardized ESG disclosure. As national policies accelerate ESG adoption, academia has correspondingly expanded research into its determinants.

Existing studies have investigated ESG drivers across multiple levels. At the macro level, research has explored the role of regional digital economies [1], government–business transparency [2], green finance [3], institutional innovation [4], interest rate reforms [5], and legal systems [6]. At the micro level, attention has focused on managerial characteristics—such as executive stability [7] and independent directors’ overseas education [8]—as well as shareholder behaviors, including engagement by non-controlling shareholders [9] and institutional investors [10]. Firm-level strategies such as digital transformation [11] have also been shown to positively influence ESG outcomes.

But there is still room for further exploration. While some studies have considered overseas experience among board members [8], few have systematically examined how executives with overseas backgrounds influence ESG performance, particularly through internal organizational mechanisms. More importantly, the underlying causal pathways—how returnee executives affect ESG through concrete mediators—have not been clearly identified. Additionally, the role of digital transformation as a boundary condition remains largely unexplored in this context. As such, our understanding of how executive international experience interacts with internal and technological factors to shape ESG outcomes is still limited [12].

To address this gap, this study draws on upper echelon theory and stakeholder theory to explore both the direct and indirect impacts of executives with overseas backgrounds on ESG performance. It proposes and empirically tests three mediating mechanisms—green technology innovation, internal control quality, and corporate risk-taking levles—and further examines how digital transformation moderates these relationships. This integrative framework allows us to unpack the complex transmission mechanisms that link top management team characteristics with ESG outcomes.

This study offers several contributions to the literature. First, it advances the understanding of ESG strategic decision-making by identifying and simultaneously testing multiple mediation pathways, offering a more comprehensive perspective than prior research that typically focuses on single mechanisms. Second, it introduces digital transformation as a novel contextual moderator, enriching the discussion on how external technological change conditions the effects of executive attributes. Third, by conducting heterogeneity analysis across industry types—including heavily polluting, manufacturing, capital-intensive, and technology-intensive sectors—the study generates insights with practical relevance for industry-specific ESG strategies. Finally, the findings offer empirical support for policy and managerial decisions regarding executive team composition and ESG advancement, aligning with China’s “dual carbon” goals and long-term sustainability agenda.

2. Literature Review and Research Hypotheses

2.1. Executives with Overseas Backgrounds and Corporate ESG Performance

Executives with overseas backgrounds refer to senior corporate decision-makers—such as CEOs, CFOs, or board members—who have obtained educational degrees or held professional positions in foreign countries. These experiences shape their values, cognitive frameworks, and strategic decision-making preferences. Meanwhile, corporate ESG performance encompasses a firm’s effectiveness in addressing environmental protection, social responsibility, and governance practices, often evaluated through ESG ratings or disclosures by third-party institutions. The concept of ESG was first comprehensively proposed in 2004 by the United Nations Global Compact (UNGC) in its report Who Cares Wins. Originating from reflections in developed countries on corporate social responsibility and sustainable development, ESG gradually evolved into an investment strategy. Compared with traditional investment philosophies, ESG investing places greater emphasis on firms’ performance across environmental, social, and governance dimensions, thereby aiming to maximize both economic and social benefits [13]. Against this backdrop, the role of corporate executive teams has become particularly critical. As the designers and implementers of strategic decisions, their strategic orientation directly shapes the overall direction of the enterprise [14]. According to upper echelons theory, executives’ risk preferences, decision-making tendencies, and ultimate strategic choices are largely influenced by their cognitive frameworks and problem-solving styles. As a form of corporate strategic behavior, ESG practices depend on the decisions executives make regarding a firm’s strategic positioning and development goals—decisions that are themselves profoundly shaped by individual executive characteristics. In addition, human capital imprinting theory posits that individuals’ cognitive patterns and behavioral styles often bear the deep “imprints” of their past life experiences, work histories, and the environments in which they have operated [13]. Therefore, in the context of globalization, executives’ overseas backgrounds have become an important factor influencing corporate ESG performance.

Since developed countries adopted ESG principles relatively early, executives with overseas education and professional experience are more likely to be familiar with the methods and approaches for implementing ESG practices and enhancing ESG performance within firms [15]. They can also draw upon knowledge and experience gained in other countries with diverse cultural contexts regarding ESG improvements, which further deepens their understanding of the importance of advancing ESG performance and the pathways to achieve it. Accordingly, executives with overseas backgrounds are able to provide valuable experiential support when firms need to make ESG-related strategic decisions, thereby facilitating scientifically informed choices that serve the broader interests of the organization and ultimately improve ESG outcomes. Therefore, it is reasonable to posit that executives’ overseas backgrounds influence their cognition and preferences regarding ESG-related behaviors within firms. Based on this reasoning, the following hypothesis is proposed:

H1. 

Executives with overseas backgrounds have a positive impact on corporate ESG performance.

2.2. Executives with Overseas Backgrounds, Corporate Green Technological Innovation, and ESG Performance

With the intensification of the global environmental crisis and the advancement of sustainable development goals, green technological innovation has become a crucial means by which firms achieve long-term competitive advantages and fulfill their social responsibilities [16]. Green innovation not only enables enterprises to respond to increasingly stringent environmental regulations and evolving market demands but also improves resource efficiency and reduces environmental pollution, thereby strengthening firms’ ESG performance [17]. Existing studies have demonstrated that executives with overseas backgrounds are more likely to promote corporate green technological innovation [16]. Such executives typically receive international education and gain exposure to the latest global advancements in green technologies and sustainability concepts. Because developed countries were early adopters of green innovation and sustainable development, these executives are well-positioned to introduce cutting-edge technologies and management practices into firms, helping them achieve breakthroughs in environmental technologies and energy efficiency. According to upper echelons theory, executives’ cognitive styles and decision-making preferences are profoundly shaped by their educational and professional experiences. Consequently, executives with overseas backgrounds tend to place greater emphasis on environmental protection and sustainable development, further driving firms’ progress in the research, development, and application of green technologies.

As an important pathway for firms to achieve sustainable development through the research, development, and application of environmentally friendly technologies, green technological innovation directly influences corporate performance in the environmental dimension. On the one hand, green innovation can significantly enhance resource utilization efficiency, reduce pollutant emissions and carbon footprints, and thereby improve environmental performance. On the other hand, green technological innovation can promote green supply chain management and facilitate fair and transparent operational processes, ultimately leading to comprehensive improvements in overall ESG performance. Existing studies have shown that corporate green technological innovation effectively mitigates the negative environmental impacts of business operations and encourages firms to assume greater environmental responsibility within the framework of sustainable development goals [18]. At the same time, green innovation can strengthen a company’s social image, enhance its reputation among stakeholders, and thereby increase social capital and market competitiveness [19]. Therefore, green technological innovation is not merely a technical investment but also a strategic initiative to comprehensively enhance firms’ ESG performance. Based on this reasoning, the following hypothesis is proposed:

H2. 

Executives with overseas backgrounds promote corporate ESG performance by enhancing green technological innovation.

2.3. Executives with Overseas Backgrounds, the Quality of Internal Control, and ESG Performance

According to human capital imprinting theory, executives’ personal experiences—especially overseas education and professional experience—profoundly shape their cognitive styles, management approaches, and decision-making preferences. Executives with overseas backgrounds typically receive more systematic international training and are well-versed in the high standards and best practices of internal control and governance established in developed countries. They are able to integrate these experiences into corporate management, thereby facilitating the optimization of firms’ internal control systems [20]. In addition, executives with overseas backgrounds often possess stronger risk awareness and a heightened sense of compliance, which enable them to effectively identify and respond to the complex risks faced by firms. As a result, they can enhance the effectiveness and execution of internal controls, ultimately improving the overall quality of internal governance.

High-quality internal controls ensure that corporate policies and strategies concerning environmental, social, and governance issues are effectively implemented, thereby facilitating the identification, management, and mitigation of ESG-related risks [14]. Through robust internal control systems, firms are better able to monitor and report their performance in environmental protection, social responsibility, and corporate governance, thereby ensuring transparency and regulatory compliance. Moreover, sound internal controls promote effective management in areas such as resource utilization, emissions management, and stakeholder engagement, which not only improve ESG performance but also strengthen firms’ capacity for sustainable development. Empirical research has demonstrated a significant positive correlation between the quality of internal controls and firms’ sustainable governance and social responsibility performance [19]. Based on this reasoning, the following hypothesis is proposed:

H3. 

Executives with overseas backgrounds improve corporate ESG performance by enhancing the quality of internal controls.

2.4. Executives with Overseas Backgrounds, Corporate Risk-Taking Levels, and ESG Performance

According to upper echelons theory, executives’ decision-making styles and risk preferences are often closely linked to their personal experiences [20]. Executives with overseas backgrounds typically possess broader international perspectives and more diverse risk management experience, enabling them to comprehensively assess risks and opportunities in the context of globalization, thereby enhancing firms’ capacity to bear risks associated with innovation and strategic adjustments [21]. Furthermore, these executives often gain experience in more mature capital markets and become familiar with advanced risk management tools and practices from developed economies. They tend to adopt a balanced approach of assuming moderate risks within the bounds of strict compliance and prudent management, with the aim of driving sustainable development and creating long-term value for the enterprise. Therefore, executives with overseas backgrounds can guide firms to undertake innovative risks within reasonable limits, thereby fostering overall competitiveness and strategic development.

A firm’s level of risk-taking has a significant impact on its ESG performance. Moderate risk-taking levels are often closely linked to a company’s capacity for innovation and can drive firms to adopt more forward-looking measures in environmental protection, social responsibility, and corporate governance. Higher levels of risk-taking frequently align with ESG-related strategies such as green technological innovation and the upgrading of environmental management practices. When confronting external environmental challenges, firms can leverage appropriate innovation risks to promote the application of environmentally friendly technologies and strengthen social responsibility practices. At the governance level, improvements in compliance and transparency aimed at enhancing ESG performance also typically require proactive risk management. Empirical research has shown that appropriate risk-taking levels not only enable firms to respond more effectively to environmental and social challenges but also increases their long-term value [21]. Based on this reasoning, the following hypothesis is proposed:

H4. 

Executives with overseas backgrounds promote corporate ESG performance by increasing corporate risk-taking level.

2.5. Executives with Overseas Backgrounds, Corporate Digital Transformation, and ESG Performance

With the rapid development of digital technologies and artificial intelligence, digital transformation has exerted a profound influence on corporate development. Through the innovation and application of information technologies, digital transformation can optimize firms’ operational processes and enhance decision-making efficiency [22]. Specifically, digital transformation provides more precise data support, enabling executives to monitor and manage environmental impacts, social responsibilities, and governance structures more effectively. Consequently, when driving ESG strategies, executives with overseas backgrounds can leverage digital tools to improve the accuracy and execution of decisions, thereby strengthening their positive influence on ESG performance. However, firms with lower levels of digital transformation may not fully harness the advantages of executives with overseas experience due to insufficient technological support and limited data analytics capabilities, which constrain executives’ effectiveness in ESG decision-making. Therefore, it is reasonable to expect that digital transformation moderates the relationship between executives with overseas backgrounds and corporate ESG performance. When the degree of digital transformation is high, the positive impact of executives with overseas backgrounds on ESG performance is more pronounced. Based on this reasoning, the following hypothesis is proposed (Figure 1):

H5. 

Digital transformation moderates the impact of executives with overseas backgrounds on corporate ESG performance.

3. Research Design

3.1. Data Sources

This study selects A-share listed companies in China from 2011 to 2022 as the research sample. The following criteria were applied for sample selection: (1) Based on the industry classification standards issued by the China Securities Regulatory Commission (CSRC) in 2012, companies in the financial sector, ST companies, and ST* companies were excluded; (2) Firms with missing or clearly abnormal data on key variables were removed, and other missing data were imputed using interpolation methods.

After screening, the final sample comprises 4521 firms with a total of 34,299 observations. All continuous variables were winsorized at the 1% level at both tails. The data were obtained from the National Intellectual Property Administration’s patent database, the Wind Database, the CSMAR Database, and publicly available annual reports of listed companies.

3.2. Variable Definitions

3.2.1. Dependent Variable

Corporate ESG Performance (ESG). Corporate ESG performance is measured using the Huazheng ESG Rating System. This system is developed based on international ESG evaluation experience and adapted to the specific conditions of China. It is characterized by broad coverage and strong timeliness.

The nine Huazheng ESG rating categories, ranging from C to AAA, were assigned numerical values from 1 to 9, respectively, to construct the variable “ESG Score”. The annual average of these scores was calculated to represent each firm’s annual ESG performance, where higher scores indicate better ESG performance.

3.2.2. Independent Variable

Executives with Overseas Backgrounds. There is no uniform definition of corporate executives in the academic literature; terms such as managers, the executive team, and senior management are often used interchangeably. This paper defines executives as the board members and senior managers disclosed in listed companies’ annual reports. Executives with overseas backgrounds are specifically those who have studied or worked in countries or regions outside mainland China. Two measures are used to capture this variable: (1) Whether the firm has appointed any executives with overseas backgrounds (denoted as oversea_1); (2) the proportion of executives with overseas backgrounds within the executive team (denoted as oversea_ratio).

3.2.3. Mediating Variables

Corporate Green Technological Innovation (Ginn). This variable is measured by identifying the number of green patents applied for by each firm. The identification is based on IPC codes included in the “IPC Green Inventory” published by the World Intellectual Property Organization. The natural logarithm of the count of green patent applications plus one is used to represent the level of green technological innovation.

Quality of Internal Control (inctr). This study employs the “Dibo China Listed Company Internal Control Index”, which evaluates firms’ overall performance in internal control compliance, asset security, and operational management. A higher index score indicates a higher quality of internal controls.

Corporate Risk-Taking Levels. This paper measures firms’ risk-taking levels by the volatility of earnings. Specifically, risk-taking levels are assessed using the volatility of return on total assets (Roa) over the observation period. Higher volatility implies a higher level of risk-taking. Roa is calculated as earnings before interest and taxes divided by total assets at year-end. To mitigate industry and business cycle effects, the adjusted Roa (Adj_Roa) is computed by subtracting the annual industry mean Roa according to Equation (1). Then, using Equation (2), the standard deviation of Adj_Roa is calculated on a rolling basis over three-year observation periods (from year t to t + 2). This standard deviation, denoted as Risk1, serves as the indicator of corporate risk-taking levels.

$${Adj\_Roa}_{i,t}={\displaystyle \frac{{EBIT}_{i,t}}{{ASSET}_{i,t}}}-{\displaystyle \frac{1}{X}}{\sum }_{i=1}^X{\displaystyle \frac{{EBIT}_{i,t}}{{ASSET}_{i,t}}}$$

(1)

$${Risk1}_{i,t}=\sqrt{{\displaystyle \frac{1}{T-1}}{\sum }_{t=1}^T{({Adj\_Roa}_{i,t}-{\displaystyle \frac{1}{T}}{\sum }_{t=1}^T{Adj\_Roa}_{i,t})}^2|T=3}$$

(2)

3.2.4. Moderating Variable

Digital Transformation (dig). This variable is constructed as follows: First, five dimensions are identified: “artificial intelligence technology”, “blockchain technology”, “cloud computing technology”, “big data technology”, and “digital technology applications.” For each dimension, relevant keywords are defined to create a specialized terminology dictionary. Next, Python 3.13 scripts are used to crawl the full texts of firms’ annual reports and count the frequency with which these keywords appear in each report. The occurrences are then aggregated. Finally, the natural logarithm of the total count plus one is calculated to generate a composite indicator of firms’ level of digital transformation.

3.2.5. Control Variables

To improve the accuracy of the empirical analysis, a series of firm-level control variables in the model are studied. These variables are: firm size (Size), firm age (Age), revenue growth rate (Growth), leverage ratio (Lever), proportion of independent directors (Indep), CEO duality (Dual), ownership concentration (Top1), and board size (Board). Detailed definitions of these variables are provided in

Table 1. Variable Definitions.

Variable Type	Variable Name	Symbol	Definition
Dependent Variable	Corporate ESG Performance	ESG	Huazheng ESG ratings from C to AAA assigned values 1–9; annual average calculated.
Independent Variable	Executives with Overseas Background	oversea_1	Whether the firm has appointed executives with overseas backgrounds (1 = yes, 0 = no).
	Proportion of Overseas Background Executives	oversea_ratio	Proportion of executives with overseas backgrounds within the management team.
Mediating Variable	Green Technological Innovation	Ginn	Natural log of (number of green patent applications +1).
	Internal Control Quality	inctr	Dibo China Listed Company Internal Control Index.
	Corporate Risk-Taking Level	Risk1	Earnings volatility calculated over rolling three-year periods.
Moderating Variable	Digital Transformation	dig	Natural log of (sum of keyword occurrences from text analysis +1).
Control Variable	Firm Size	Size	Natural log of (year-end total assets +1).
	Firm Age	Age	Natural log of (years since establishment +1).
	Revenue Growth Rate	Growth	(Current period revenue − prior period revenue)/prior period revenue.
	Leverage Ratio	Lever	Total liabilities/total assets.
	Proportion of Independent Directors	Indep	Number of independent directors/total number of board members.
	CEO Duality	Dual	Equals 1 if the chairman concurrently serves as general manager, 0 otherwise.
	Ownership Concentration	Top1	Shareholding ratio of the largest shareholder.
	Board Size	Board	Natural log of the number of board members of the listed company.

.

3.3. Econometric Models

To test Research Hypothesis H1, the following model is constructed to examine the impact of executives with overseas backgrounds on corporate ESG performance:

$${ESG}_{i,t}={\beta }_0+{\beta }_1{oversea\_1}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(3)

$${ESG}_{i,t}={\beta }_0+{\beta }_1{oversea\_ratio}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(4)

In Models (3) and (4), β₁ denotes the coefficient of the independent variable, Controls represents the control variables, α indicates the coefficients of the control variables, and ε_i,t denotes the random error term.

For testing mediation effects, the following models are constructed based on Models (3) and (4) to test Hypothesis H2:

$${Ginn}_{i,t}={\beta }_0+{\beta }_1{oversea\_1}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(5)

$${Ginn}_{i,t}={\beta }_0+{\beta }_1{oversea\_ratio}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(6)

$${ESG}_{i,t}={\beta }_0+{\beta }_1{oversea\_1}_{i,t}+{\beta }_2{Ginn}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(7)

$${ESG}_{i,t}={\beta }_0+{\beta }_1{oversea\_ratio}_{i,t}+{\beta }_2{Ginn}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(8)

Similarly, based on Models (3) and (4), the following models are constructed to test Hypothesis H3:

$${inctr}_{i,t}={\beta }_0+{\beta }_1{oversea\_1}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(9)

$${inctr}_{i,t}={\beta }_0+{\beta }_1{oversea\_ratio}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(10)

$${ESG}_{i,t}={\beta }_0+{\beta }_1{oversea\_1}_{i,t}+{\beta }_2{inctr}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(11)

$${ESG}_{i,t}={\beta }_0+{\beta }_1{oversea\_ratio}_{i,t}+{\beta }_2{inctr}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(12)

Likewise, based on Models (3) and (4), the following models are constructed to test Hypothesis H4:

$${Risk1}_{i,t}={\beta }_0+{\beta }_1{oversea\_1}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(13)

$${Risk1}_{i,t}={\beta }_0+{\beta }_1{oversea\_ratio}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(14)

$${ESG}_{i,t}={\beta }_0+{\beta }_1{oversea\_1}_{i,t}+{\beta }_2{Risk1}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(15)

$${ESG}_{i,t}={\beta }_0+{\beta }_1{oversea\_ratio}_{i,t}+{\beta }_2{Risk1}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(16)

The following models are constructed to test Hypothesis H5:

$${ESG}_{i,t}={\beta }_0+{\beta }_1{oversea\_1}_{i,t}+{\beta }_2{dig}_{i,t}+{\beta }_3{{oversea\_1}_{i,t} \ast dig}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(17)

$${ESG}_{i,t}={\beta }_0+{\beta }_1{oversea\_ratio}_{i,t}+{\beta }_2{dig}_{i,t}+{\beta }_3{{oversea\_ratio}_{i,t} \ast dig}_{i,t}+\alpha {Controls}_{i,t}+{\epsilon }_{i,t}$$

(18)

4. Empirical Analysis

4.1. Descriptive Statistics

The descriptive statistics for the main variables are presented in

Table 2. Descriptive statistics of variables.

Variable	Sample Number	Mean	Standard Deviation	Min	Max
ESG	34,299	4.151	1.009	1	6.75
oversea_1	34,299	0.261	0.439	0	1
oversea ratio	34,299	0.063	0.128	0	1
Ginn	34,299	2.817	22.716	0	1166
inctr	33,757	636.482	131.197	0	995.36
Risk1	33,068	0.033	0.039	0	0.511
dig	34,299	1.429	1.406	0	6.301
Size	34,299	22.25	1.295	19.585	26.452
Age	34,299	2.152	0.824	0	3.401
Growth	34,299	0.164	0.409	−0.658	4.024
Lev	34,299	0.424	0.205	0.032	0.908
Board	34,299	2.119	0.197	1.609	2.708
Indep	34,299	37.682	5.382	28.57	60
Dual	34,299	0.287	0.452	0	1
Top1	34,299	33.901	14.796	8.02	75.779

. The results show that the mean value of corporate ESG performance is 4.151, indicating that on average, the ESG ratings of the sample firms fall between B and BB, suggesting that there is considerable room for improvement overall. The standard deviation of ESG performance is 1.009, with a minimum of 1 and a maximum of 6.75, reflecting substantial variation in ESG performance across firms. Regarding the variables capturing executives’ overseas backgrounds, the mean values of oversea_1 and oversea_ratio are 0.261 and 0.063, respectively, indicating that 26.1% of firms have appointed at least one executive with an overseas background, and that such executives account for an average of 6.3% of the executive team in the sample firms—a relatively low proportion. The mean value of corporate green technological innovation is 2.817, suggesting that the overall level of green innovation is not high. The standard deviation is 22.716, with a minimum of 0 and a maximum of 1166, highlighting considerable disparities in green innovation across firms. The mean value of internal control quality is 636.482, with a standard deviation of 131.197, indicating that while overall internal control quality is relatively high, there are significant differences among firms. The mean value of risk-taking level is 0.033, with a standard deviation of 0.039, suggesting that the overall level of risk-taking is low and that variation across firms is limited. Finally, the mean value of digital transformation is 1.429, with a standard deviation of 1.406, and a range from 0 to 6.301, demonstrating considerable differences in the degree of digital transformation among firms.

4.2. Regression Results

The estimation results of the baseline regression models are presented in

Table 3. Baseline regression results.

Variable	(1)	(2)	(3)	(4)
	ESG	ESG	ESG	ESG
oversea_1	0.054 *** (0.013)		0.033 ** (0.013)
oversea_ratio		0.208 *** (0.048)		0.132 *** (0.047)
Size			0.317 *** (0.010)	0.317 *** (0.010)
Age			−0.119 *** (0.017)	−0.120 *** (0.017)
Growth			−0.0209 ** (0.009)	−0.021 ** (0.009)
Lev			−0.931 *** (0.039)	−0.931 *** (0.039)
Board			0.0585 (0.043)	0.060 (0.043)
Indep			0.0112 *** (0.001)	0.011 *** (0.001)
Dual			−0.0328 ** (0.013)	−0.033 *** (0.013)
Top1			0.007 *** (0.001)	0.007 *** (0.001)
Constant	4.130 *** (0.016)	4.131 *** (0.016)	−2.922 *** (0.234)	−2.919 *** (0.234)
Observations	34,299	34,299	34,299	34,299
R2	0.015	0.015	0.066	0.066

Note: **, and *** indicate significance at the 5%, and 1% levels, respectively. Standard errors are reported in parentheses. The same applies to the tables below.

. Columns (1) and (2) report the regressions including only the key independent variables—specifically, whether the firm has appointed executives with overseas backgrounds and the proportion of such executives within the management team—to examine their impact on ESG performance. The results indicate that having executives with overseas backgrounds exerts a positive and statistically significant effect on ESG performance at the 1% significance level. The coefficient of 0.054 suggests that appointing at least one overseas-background executive is associated with an average increase of approximately 5.4% in the ESG score relative to the sample mean. Likewise, the proportion of overseas-background executives in the management team is positively associated with ESG performance and significant at the 10% level. The coefficient of 0.208 indicates that a full 100% increase in the share of such executives could lead to about a 20.8% improvement in ESG score, with proportionate gains for smaller increases. Columns (3) and (4) of Table 3 show the stepwise regression results after sequentially adding the relevant control variables. The findings remain robust: the presence of executives with overseas backgrounds continues to have a significantly positive effect on ESG performance at the 1% significance level. The coefficient of 0.208 indicates that a full 100% increase in the share of such executives could lead to about a 20.8% improvement in ESG score, with proportionate gains for smaller increases. The proportion of such executives retains a positive effect significant at the 10% level. The coefficient of 0.132 indicates that, for each unit increase in the proportion of overseas-background executives in the management team, the ESG score is expected to rise by 0.132 points, holding other factors constant. These effect sizes indicate that the influence of internationally experienced executives is not only statistically significant but also economically meaningful, underscoring their strategic value in advancing ESG outcomes. These results suggest that firms can effectively enhance their performance in environmental, social, and governance dimensions by appointing executives with overseas backgrounds and increasing their representation within the management team, thereby confirming the validity of Hypothesis H1.

4.3. Robustness Tests

4.3.1. Replacing the Dependent Variable

ESG practices play a crucial role in shaping a company’s positive public image and gaining public trust. Consequently, some listed firms may have incentives to overstate their ESG performance in order to secure greater benefits. This tendency can mislead rating agencies during their evaluations, potentially resulting in inaccurate ESG ratings. To mitigate the risk of misinterpretation arising from the quality of ESG information disclosure, this study uses Bloomberg ESG scores and SynTao Green Finance ESG ratings as alternative dependent variables. Models (3) and (4) were re-estimated using these alternative measures. As shown in

Table 4. Robustness tests using alternative dependent variables and lagged independent variables.

Variable	(1)	(2)	(3)	(4)	(5)	(6)
	ESG	ESG	PESG	PESG	SESG	SESG
Loversea_1	0.0352 ** (0.015)
Loversea_ratio		0.155 *** (0.055)
oversea_ratio				1.431 *** (0.555)		0.348 ** (0.157)
oversea_1			0.287 ** (0.142)		0.0796 ** (0.039)
Size	0.327 *** (0.011)	0.324 *** (0.011)	1.242 *** (0.113)	1.235 *** (0.114)	0.394 *** (0.059)	0.394 *** (0.059)
Age	−0.272 *** (0.026)	−0.272 *** (0.026)	0.560 ** (0.240)	0.557 ** (0.240)	−0.0557 (0.093)	−0.0574 (0.093)
Growth	−0.0108 (0.010)	−0.0106 (0.010)	0.0733 (0.099)	0.0707 (0.099)	−0.103 *** (0.039)	−0.103 *** (0.039)
Lev	−0.835 *** (0.043)	−0.830 *** (0.043)	−3.848 *** (0.466)	−3.852 *** (0.466)	−0.610 *** (0.200)	−0.616 *** (0.200)
Board	0.0218 (0.047)	0.0181 (0.047)	1.298 *** (0.435)	1.324 *** (0.435)	0.0407 (0.145)	0.0532 (0.145)
Indep	0.0114 *** (0.001)	0.0114 *** (0.001)	0.0553 *** (0.013)	0.0548 *** (0.013)	0.00744 * (0.004)	0.00749 * (0.004)
Dual	−0.0382 *** (0.014)	−0.0416 *** (0.014)	0.0117 (0.148)	0.00821 (0.148)	−0.0452 (0.050)	−0.0475 (0.050)
Top1	0.00489 *** (0.001)	0.00476 *** (0.001)	0.0209 *** (0.007)	0.0208 *** (0.007)	0.00253 (0.003)	0.00243 (0.003)
Constant	−2.677 *** (0.264)	−2.602 *** (0.264)	−13.24 *** (2.665)	−13.12 *** (2.666)	−4.713 *** (1.401)	−4.733 *** (1.400)
Observations	29,285	29,257	10,979	10,979	4204	4204
R2	0.066	0.066	0.698	0.698	0.320	0.320

Note: *, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively. Standard errors are reported in parentheses.

, the results remain consistent with the original findings, supporting the robustness of the conclusions.

4.3.2. Lagging the Independent Variable by One Period

Since firms with stronger ESG performance may be more inclined to appoint executives with overseas backgrounds, there is a potential risk of reverse causality in the model. To address this concern, as well as possible issues of look-ahead bias, this study lags the independent variables by one period. As shown in Table 4, the results remain unchanged, further supporting the robustness of the findings.

4.3.3. Sample Selection Bias

To further ensure the reliability of the research conclusions, this study employs the Propensity Score Matching (PSM) method. Firms are divided into two groups based on whether they have appointed executives with overseas backgrounds, with firms employing such executives constituting the treatment group. The control variables described earlier are used as matching covariates, and a 1:1 nearest-neighbor matching approach is applied to identify suitable control group firms for each treatment group firm. As shown in

Table 5. Balance test results.

Variable	Sample	Mean		Standardized Bias %	Reduction in Bias %	t-Test		V(T)/ V(C)
		Treatment Group	Control Group			t	p > |t|
size	U	21.999	22.160	−13.200		−7.140	0.000	0.87 *
	M	21.999	21.977	1.7	86.800	0.810	0.418	0.980
age	U	1.974	2.087	−14.600		−7.920	0.000	0.90 *
	M	1.974	1.963	1.4	90.300	0.640	0.525	0.91 *
growth	U	0.177	0.172	1.2		0.650	0.518	0.980
	M	0.177	0.179	−0.500	54.500	−0.240	0.811	0.94 *
lever	U	0.405	0.419	−7.100		−3.910	0.000	0.990
	M	0.405	0.405	−0.300	96.500	−0.110	0.909	1.020
indep	U	0.378	0.376	3.3		1.820	0.069	0.990
	M	0.378	0.379	−1.500	55.400	−0.660	0.507	0.990
dual	U	0.315	0.284	6.9		3.830	0.000	1.060
	M	0.315	0.308	1.7	75.800	0.740	0.458	1.010
top1	U	0.330	0.348	−12.300		−6.650	0.000	0.87 *
	M	0.330	0.332	−1.100	91.300	−0.490	0.625	0.94 *
board	U	2.100	2.125	−12.700		−6.910	0.000	0.93 *
	M	2.100	2.101	−0.300	97.400	−0.150	0.881	0.960

Note: * indicate significance at the 10% levels. Standard errors are reported in parentheses.

, the balance test results indicate that after matching, the biases of all covariates between the treatment and control groups are substantially reduced, demonstrating good overall matching quality.

Table 6. Impact of executives with overseas backgrounds on corporate esg performance after propensity score matching.

Variable	(1)	(2)
	ESG	ESG
oversea_1	0.0728 ** (0.033)
oversea_ratio		0.398 *** (0.120)
Controls	YES	YES
Constant	4.997 *** (0.654)	5.045 *** (0.673)
Observations	6407	6490
R2	0.017	0.016

Note: **, and *** indicate significance at the 5%, and 1% levels, respectively. Standard errors are reported in parentheses.

reports the regression results of re-estimating Models (3) and (4) after propensity score matching. Column (1) shows that firms employing executives with overseas backgrounds exhibit significantly better ESG performance, with a coefficient of 0.0728 significant at the 5% level. This result represents an improvement in both significance and effect size compared to the unmatched estimates. Column (2) demonstrates that the higher the proportion of executives with overseas backgrounds within the management team, the better the firm’s ESG performance. The coefficient is 0.398 and significant at the 1% level, which is a notable increase compared to the pre-matching coefficient (0.222). These findings indicate that after controlling for sample selection bias using PSM, Hypothesis H1 remains valid, and the study’s conclusions are robust.

4.3.4. Heterogeneity Analysis

It is worth noting that the impact of executives with overseas backgrounds on corporate ESG performance may vary depending on firm characteristics or industry differences. Based on this consideration, this study conducts heterogeneity analyses from the perspectives of firms’ industry pollution attributes, production attributes, and factor intensities. The results are presented in

Table 7. Heterogeneity tests.

	Pollution Attribute		Production Attribute		Factor Intensity
	Heavily Polluting	Non-Heavily Polluting	Manufacturing	Non-Manufacturing	Labor-Intensive	Capital-Intensive	Technology-Intensive
oversea_ ratio	0.216 (0.173)	0.293 *** (0.092)	0.249 ** (0.098)	0.282 * (0.149)	0.265 (0.187)	0.439 *** (0.166)	0.186 * (0.111)
Constant	5.301 *** (0.685)	5.346 *** (0.437)	4.896 *** (0.452)	6.417 *** (0.642)	7.088 *** (0.749)	4.719 *** (0.702)	4.882 *** (0.544)
Controls	Yes	Yes	Yes	Yes	Yes	Yes	Yes
N	4917	11,150	10,588	5479	4158	4716	7193
R2	0.022	0.023	0.019	0.024	0.028	0.020	0.022

Note: *, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively. Standard errors are reported in parentheses.

.

Empirical findings show that, overall, executives with overseas backgrounds have a positive impact on ESG performance across different types of firms. However, in heavily polluting enterprises, the effect does not pass the 10% significance level. One possible explanation is that the diverse cultural backgrounds and values introduced by executives with overseas experience may conflict with the firm’s local organizational culture, leading to conceptual disagreements and implementation barriers when promoting ESG practices. On the other hand, heavily polluting firms may be more influenced by external pressures and mandates to invest in ESG, while lacking an intrinsic motivation and understanding of the role and value of ESG in their business operations.

From the perspective of firms’ production attributes, executives with overseas backgrounds exert a significant positive effect on ESG performance in both manufacturing and non-manufacturing enterprises, with the impact being more pronounced in manufacturing firms. A possible explanation is that executives with overseas experience enhance management’s risk appetite and confidence while also strengthening their attention to environmental issues, thereby promoting green technological innovation within the firm. In the manufacturing sector, such risk-taking capacity and confidence are especially important, as manufacturing often requires substantial capital investment and technological innovation. Therefore, the positive influence of executives with overseas backgrounds is more evident in manufacturing enterprises.

From the perspective of firms’ factor intensity, in labor-intensive enterprises, the impact of executives with overseas backgrounds on ESG performance is not significant. In contrast, in capital-intensive and technology-intensive firms, the positive influence of such executives on ESG performance is more pronounced. A possible explanation is that capital-intensive and technology-intensive firms tend to rely more heavily on advanced technologies and sophisticated capital operations. These firms are typically more sensitive to external environmental changes and, therefore, are more likely to adopt the advanced management practices and strategic orientations introduced by executives with international perspectives. Moreover, capital-intensive and technology-intensive enterprises place greater emphasis on the role of ESG in enhancing long-term competitiveness and have more resources and capabilities to implement related initiatives. By comparison, labor-intensive firms may prioritize cost and operational efficiency, attaching relatively less importance to and investing fewer resources in ESG, which diminishes the positive impact of executives with overseas backgrounds in such enterprises.

5. Mechanism Tests

In the preceding analyses, we established a reliable and robust conclusion through baseline regression models, multiple robustness checks, and addressing potential endogeneity issues: executives with overseas backgrounds can significantly improve corporate ESG performance. However, this research has thus far only confirmed the causal relationship between the two, without delving into the specific mechanisms underlying this effect. Therefore, in this section, we draw upon the methodological approach to empirically examine the transmission pathways through which executives with overseas backgrounds influence firms’ ESG performance.

5.1. The Mediating Role of Corporate Green Technological Innovation

Based on Models (5)–(8), Hypothesis H2 is tested. As shown in

Table 8. Mechanism test of corporate green technological innovation.

Variable	(1)	(2)	(3)	(4)
	Ginn	ESG	Ginn	ESG
oversea_1	0.281 *** (0.095)	0.0344 * (0.021)
oversea_ratio			1.088 *** (0.369)	0.223 *** (0.081)
Ginn		0.00853 *** (0.002)		0.00852 *** (0.002)
Controls	YES	YES	YES	YES
Constant	−5.347 *** (1.554)	5.442 *** (0.368)	−5.699 *** (1.554)	5.445 *** (0.368)
Observations	15,967	16,067	15,967	16,067
R2	0.019	0.019	0.019	0.019

Note: * and *** indicate significance at the 10% and 1% levels, respectively. Standard errors are reported in parentheses.

, in Columns (1) and (3), the coefficients are positive and statistically significant at the 1% level, indicating that both the appointment of executives with overseas backgrounds and their proportion within the management team significantly promote green technological innovation. The regression results in Columns (2) and (4) likewise show significantly positive coefficients, demonstrating that by fostering green technological innovation, firms’ appointment of overseas-background executives and increasing their representation in management significantly enhance ESG performance. Therefore, Hypothesis H2 is supported. Executives with overseas backgrounds often possess broader exposure to global sustainability practices and innovation-driven environments. This background shapes their cognitive orientation toward long-term, eco-conscious strategies, which naturally leads to a stronger emphasis on green technological innovation as both a compliance requirement and a source of competitive differentiation. Their familiarity with global environmental standards equips them to drive innovation that aligns with international ESG expectations.

5.2. The Mediating Role of the Quality of Internal Control

Based on Models (9)–(12), Hypothesis H3 is tested. As shown in

Table 9. Mechanism test of internal control quality.

Variable	(1)	(2)	(3)	(4)
	inctr	ESG	inctr	ESG
oversea_1	7.599 ** (3.525)	0.0428 ** (0.021)
oversea_ratio			42.89 *** (14.184)	0.294 *** (0.082)
inctr		0.000759 *** (0.000)		0.000750 *** (0.000)
Controls	YES	YES	YES	YES
Constant	859.3 *** (61.967)	4.706 *** (0.368)	861.0 *** (62.834)	4.833 *** (0.368)
Observations	16,007	16,007	16,007	16,007
R2	0.040	0.033	0.040	0.034

Note: **, and *** indicate significance at the 5%, and 1% levels, respectively. Standard errors are reported in parentheses.

, in Columns (1) and (3), the coefficients are positive and statistically significant at the 5% and 1% levels, respectively, indicating that both the appointment of executives with overseas backgrounds and their proportion within the management team significantly improve firms’ internal control quality. The regression results in Columns (2) and (4) likewise show significantly positive coefficients, demonstrating that by enhancing internal control quality, the appointment and higher representation of overseas-background executives significantly increase ESG performance. Therefore, Hypothesis H3 is supported. Regarding internal control quality, returnee executives are more likely to have been influenced by governance norms and compliance systems in developed markets, where transparency, audit integrity, and risk management are heavily emphasized. As such, they tend to place greater value on internal control mechanisms that support ESG disclosure, monitoring, and accountability structures within the firm.

5.3. The Mediating Role of Corporate Risk-Taking Levels

Based on Models (13)–(16), Hypothesis H4 is tested. As shown in

Table 10. Mechanism test of corporate risk-taking levels.

Variable	(1)	(2)	(3)	(4)
	Risk1	ESG	Risk1	ESG
oversea_1	0.00287 *** (0.001)	0.0353 * (0.021)
oversea_ratio			0.0119 *** (0.004)	0.198 ** (0.083)
Risk1		0.568 *** (0.215)		0.510 *** (0.197)
Controls	YES	YES	YES	YES
Constant	−0.00946 (0.016)	5.215 *** (0.365)	−0.00810 (0.017)	5.284 *** (0.376)
Observations	15,966	13,686	15,966	13,356
R2	0.050	0.019	0.058	0.021

Note: *, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively. Standard errors are reported in parentheses.

, in Columns (1) and (3), the coefficients are positive and statistically significant at the 1% level, indicating that both the appointment of executives with overseas backgrounds and their proportion within the management team significantly increase firms’ risk-taking levels. The regression results in Columns (2) and (4) likewise show significantly positive coefficients, demonstrating that by promoting higher risk-taking levels, appointing overseas-background executives and increasing their representation significantly enhance ESG performance. Therefore, Hypothesis H4 is supported. For corporate risk-taking level, executives with international experience may exhibit greater tolerance for strategic and innovation-related risks, particularly those linked to ESG transitions such as green investments or supply chain restructuring. Their broader vision and cross-cultural managerial insights enable them to assess and manage these risks more effectively, translating into proactive ESG engagement.

However, the mediation framework adopted in this study has its limitations. The three mechanisms, while statistically significant and conceptually plausible, may only capture a portion of the influence overseas-background executives exert on corporate ESG strategy. Other potential channels—such as shaping organizational culture, fostering international stakeholder networks, or influencing integrated reporting systems—may also play important roles but fall outside the scope of the current analysis. Future research could consider combining quantitative models with qualitative approaches or case-based studies to further enrich the understanding of these broader strategic impacts.

5.4. The Moderating Role of Corporate Digital Transformation

Building on the baseline regressions, Models (17) and (18) are estimated to test Hypothesis H5. As shown in

Table 11. Mechanism test of corporate digital transformation.

Variable	ESG
	(1)	(2)
oversea_1	0.0624 ** (0.028)
dig	0.0376 *** (0.009)	0.0303 *** (0.009)
oversea_1 × dig	0.0298 ** (0.012)
oversea_ratio		0.227 ** (0.112)
oversea_ratio × dig		0.0912 * (0.049)
Controls	YES	YES
Constant	5.411 *** (0.368)	5.424 *** (0.368)
Observations	16,067	16,067
R2	0.018	0.019

Note: *, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively. Standard errors are reported in parentheses.

, Column (1) indicates that both the main effect of having executives with overseas backgrounds (oversea_1) and the interaction term between overseas-background executives and digital transformation (oversea_1 × dig) have positive coefficients that are statistically significant at the 5% level. This suggests that digital transformation exerts a significant positive moderating effect on the relationship between overseas-background executives and corporate ESG performance. Similarly, Column (2) shows that both the proportion of executives with overseas backgrounds (oversea_ratio) and its interaction with digital transformation (oversea_ratio × dig) have significantly positive coefficients, indicating that digital transformation positively moderates the impact of the proportion of overseas-background executives on ESG performance. Overall, these findings demonstrate that corporate digital transformation plays a significant positive moderating role in the process through which executives with overseas backgrounds enhance ESG performance, thereby confirming Hypothesis H5.

6. Research Conclusions and Implications

6.1. Conclusions

This study investigates the impact of executives with overseas backgrounds on corporate ESG performance using data from A-share listed companies in Shanghai and Shenzhen from 2010 to 2022. The results yield several key findings:

First, executives with overseas backgrounds can promote corporate ESG performance. This conclusion remains robust after a series of endogeneity treatments and robustness checks. Second, the mechanism tests show that such executives primarily enhance ESG performance through three pathways: promoting green technological innovation, improving the quality of internal controls, and increasing firms’ capacity for risk-taking. Third, digital transformation exerts a significant positive moderating effect on the impact of overseas-background executives on ESG performance. The higher the degree of digital transformation within the firm, the more effectively overseas-background executives can leverage digital tools to improve the precision and execution of ESG-related decisions, thereby amplifying their positive influence on ESG performance. Fourth, heterogeneity analyses reveal that the positive impact of overseas-background executives on ESG performance is more pronounced in non-heavily polluting industries, as well as in manufacturing, capital-intensive, and technology-intensive enterprises.

6.2. Policy and Managerial Implications

Based on the empirical findings, this study offers the following policy recommendations:

At the policy level, ESG regulatory frameworks should be further refined to reflect firm-level and industry heterogeneity. The findings suggest that overseas-background executives have a more pronounced effect on ESG performance in non-heavily polluting, manufacturing, capital-intensive, and technology-intensive sectors. Regulators should consider developing differentiated ESG disclosure standards and evaluation benchmarks tailored to these industries. In parallel, financial tools such as tax incentives, green finance, and R&D subsidies should be directed toward enterprises in these key sectors to encourage ESG-oriented innovation and governance upgrading, especially where international management talent is in place.

At the enterprise level, firms should move beyond symbolic ESG adoption and embed ESG goals into their strategic decision-making. Given the observed positive moderating role of digital transformation, enterprises—particularly those undergoing structural upgrading—should invest in digital systems that support ESG data management, risk assessment, and internal controls. Moreover, when recruiting senior executives, firms should consider international experience as a valuable asset to strengthen ESG leadership and enhance global competitiveness.

Limitations should also be acknowledged. This study focuses on A-share listed companies, which may limit the applicability of the findings to non-listed firms or small and medium-sized enterprises. Additionally, while efforts were made to address endogeneity, causal inference regarding the mediating mechanisms should be interpreted with caution, as other unobserved strategic or cultural factors may also play a role.