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Controlling shareholder pledging and corporate ESG behavior

Author

Listed:
  • Huang, Wei
  • Luo, Yan
  • Wang, Xiaohuan
  • Xiao, Lifu

Abstract

Utilizing a large sample of Chinese listed firms, we document strong and robust evidence that both firms’ environmental, social, and governance (ESG) performance and their ESG disclosure quality deteriorate significantly after controlling shareholders’ pledging of their shares for personal loans. The results are especially evident among firms with higher valuation uncertainty, such as small firms and high-tech firms. Lastly, we show that external monitoring by institutional investors helps to mitigate such adverse impacts of controlling shareholder pledging.

Suggested Citation

  • Huang, Wei & Luo, Yan & Wang, Xiaohuan & Xiao, Lifu, 2022. "Controlling shareholder pledging and corporate ESG behavior," Research in International Business and Finance, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:riibaf:v:61:y:2022:i:c:s0275531922000435
    DOI: 10.1016/j.ribaf.2022.101655
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    6. Jinyu Chen & Yan Yang & Ran Liu & Yuan Geng & Xiaohang Ren, 2023. "Green bond issuance and corporate ESG performance: the perspective of internal attention and external supervision," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-12, December.
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    8. Yi Shen & Minghan Lyu & Jiali Zhu, 2022. "Air Pollution and Corporate Green Financial Constraints: Evidence from China’s Listed Companies," IJERPH, MDPI, vol. 19(22), pages 1-23, November.
    9. Lipeng Sun & Nur Ashikin Mohd Saat, 2023. "How Does Intelligent Manufacturing Affect the ESG Performance of Manufacturing Firms? Evidence from China," Sustainability, MDPI, vol. 15(4), pages 1-20, February.

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    More about this item

    Keywords

    ESG; Controlling shareholder pledging; Chinese A-share stock markets;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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