In the context of the "dual carbon" strategy and the growing integration of sustainable principles into business activities, ESG performance has become an essential non-financial indicator for corporate value. This study utilizes data from A-share listed businesses (2009–2024) and Huazheng ESG scores, employing a panel threshold Logit model to analyze the nonlinear effects of ESG performance on ST risk and ESG rating migration, as well as the underlying mechanisms. Findings indicate that ESG demonstrates a single threshold effect on reducing ST risk, with a threshold of approximately 70.013 for ST risk, 70.013 for rating upgrade and 75.060 for rating downgrade, beyond which the risk-mitigation effect significantly intensifies. Secondly, ESG influences rating migration asymmetrically: upward migration is limited by a "ceiling effect" for high ESG enterprises, whereas downward migration exhibits an asymmetric threshold effect, increasing downgrade risks for these entities. Third, financing constraints serve as a critical boundary condition, exerting a profound moderating effect. The environmental sensitivity of industries reveals structural heterogeneity: sensitive sectors exhibit stronger ST risk mitigation, whereas non-sensitive sectors face more severe upgrade constraints. This study elucidates the nonlinear structural impact of ESG in corporate extreme risk and ESG dynamics from a nonlinear governance viewpoint, providing theoretical and empirical backing for differentiated ESG strategies, improved rating systems, and augmented regulatory risk alerts.

Yuejia Dai, Yuanhua Liu. A Study on the Nonlinear Governance Effects of ESG Performance: Dual Evidence from ST Risk and ESG Rating Migration. Academic Journal of Business & Management (2026), Vol. 8, Issue 3: 1-9. https://doi.org/10.25236/AJBM.2026.080301.

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