The Impact of Philanthropic Donations on Corporate Future Stock Returns Under the Sustainable Development Philosophy—From the Perspective of ESG Rating Constraints

Fulfilling social responsibilities within the ESG framework has gradually become a core competitive advantage for sustainable corporate development that also serves to enhance future returns. Charitable donations constitute a crucial method through which corporations fulfill social responsibilities and represent a primary indicator in ESG ratings, ratings that in turn have an impact on future stock market returns. This study, based on data from listed companies on the Shanghai and Shenzhen stock exchanges from 2018 to 2022, employed a fixed effects model to analyze the influence of charitable donations on future returns under ESG rating constraints. The research reveals that ESG rating constraints can reduce speculative charitable donations and help to optimize the peak value of a company’s future returns. After a series of robustness tests, including using the one-period lagged explanatory variable, changing the measurement method of the explained variable, replacing the ESG with the assignment method for value determination, and considering the impact of outliers, the conclusion still holds. Heterogeneity analysis indicates that in state-owned enterprises, companies in a recessionary phase, and industries with lower levels of competition, a decelerating effect of ESG ratings on the impact of charitable donations on future returns dominates. Conversely, for mature companies, ESG ratings accelerate the positive effect of charitable donations on future returns. This paper contributes to the ESG economic consequences literature by offering empirical evidence on corporate social responsibility implementation under sustainability strategies.