The information environment and ecological environment perspectives: Capital market openness and firm ESG rating divergence*

Amid increasing demands for green economic growth, firms must adapt their business models and development strategies. However, most of the studies on this topic focus on examining the economic consequences of differences in firms' environmental, social, and governance (ESG) ratings and ignore the external influences that lead to differences in information environments. This paper explores the impact of capital market openness on firm ESG rating divergence and conducts a related mechanism analysis. It is found that capital market openness creates an information environment concern effect that is generated by analysts' concerns, audit quality, and investors' concerns, which in turn exacerbates firm ESG rating divergence. A moderating effect test shows that the pressure created by government and public concerns regarding the ecological environment generates an ecological environment concern effect on firm ESG performance and effectively decreases the firm ESG rating divergence caused by the information concern effect.