Online search attention, firms’ ESG and operating performance

The online search volume reflects public attention related to people's concerns. Environmental, Social and Governance issues (ESG) has been well documented to be a good means of serving various stakeholders. We propose that firms tend to engage in better ESG activities when they receive more public attention. Our results show that the greater the online search attention given to firms, the better the ESG is of the managers, especially for the firms involved in negative news. The association is more pronounced when firms face higher product market competition. Furthermore, ESG is a novel channel for the impact of online search attention on firms' operating performance (capital operating efficiency and profitability). These results are further validated through a series of robustness tests. The findings highlight an additional corporate governance mechanism from online search attention.