Using data from Chinese manufacturing firms (2015–2024), this study examines the association between ESG performance and investor confidence. It finds a clear hierarchy of materiality: governance (G) has a significantly stronger positive influence than environmental (E) and social (S) performance. This finding reveals that in an institutional environment characterized by the development of investor protections and markets more susceptible to sentiment-driven fluctuations, investors prioritize verifiable signals of corporate integrity embedded in governance structures over abstract commitments of environmental and social initiatives. This effect is mediated by enhanced corporate reputation and reduced information asymmetry. Furthermore, in contexts of low marketization or high economic policy uncertainty, G becomes the dominant anchor of investor confidence while the influence of E and S diminishes. The research concludes that in emerging markets, strong governance is more visible and more easily valued, serving as the key anchor for investor confidence over E or S commitments.
Gao et al. (Mon,) studied this question.