Technological Links and the Peer Effect of ESG Performance

This paper examines the implication of the peer effect of ESG performance among firms that share similar technologies. Employing a classic measure of technological links between firms, we find a persistent peer effect of ESG performance among firms with shared similar technologies. Mechanism analyses document that alleviating agency issues is a crucial mechanism of this peer effect. Specifically, the ESG performance of technology-linked firms enhances green awareness and mitigates the myopia of the focal firm’s management. Moreover, we find that this peer effect is significantly stronger when focal firms are subject to stricter external societal oversight.