How rice farming cultivates ESG rating consistency
Description
This study begins with the full population of A-share firms listed on the Chinese stock market. To construct measures of ESG rating disagreement, ESG ratings are collected from four major and widely recognized domestic agencies: Wind Economic Database, Shanghai Huazhen Index Information Service Co., Ltd. (Huazhen), Beijing Shangdao Ronglv Consulting Co., Ltd. (Shangdao Ronglv), and Menglang Sustainable Digital Technology (Shenzhen) Co., Ltd. (Menglang). For each firm-year observation, the most recent ESG rating issued by each agency is retained. The ESG rating scales differ across providers. Huazhen uses a nine-point scale (1–9), while Shangdao Ronglv and Menglang adopt ten-point scales (1–10), with higher scores indicating better ESG performance in all cases. To ensure comparability, Huazhen ratings are rescaled to a ten-point scale. As the ESG rating coverage of these agencies starts in different years (Huazhen in 2009, Shangdao Ronglv in 2015, Menglang in 2016, and Wind in 2018), the sample period is set from 2017 to 2023. This ensures that at least three ESG ratings are available for each firm in every sample year. The sample is further refined using standard data-cleaning procedures. Specifically, (1) financial firms are excluded due to their unique operational and reporting characteristics; (2) firms labeled as special treatment (ST and *ST) are removed; (3) firm-year observations covered by fewer than two ESG rating agencies are dropped; (4) observations with missing key variables are excluded; and (5) all continuous variables are winsorized at the 1st and 99th percentiles to reduce the impact of outliers. The final sample consists of 4,839 firms and 23,481 firm-year observations. In addition to ESG data, other variables are drawn from multiple sources. Data on rice and wheat planting areas are obtained from the 1987 China Statistical Yearbook. Firm-level financial data are sourced from the CSMAR database. ESG disclosure data are collected from Bloomberg, while information on internal control quality is obtained from the DIB database.