IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v155y2026ics0264999325004316.html

From activism to efficiency: Does ESG shareholder engagement mitigate credit misallocation?

Author

Listed:
  • Tudi, Tayier
  • Ni, Mingjie

Abstract

This study investigates whether and how ESG shareholder engagement enhances the efficiency of corporate credit allocation in China. Using panel data on non-financial listed firms from 2008 to 2022, we find that greater equity ownership by ESG mutual funds significantly mitigates corporate credit misallocation. Guided by information asymmetry and agency theories, the results indicate that ESG investors improve credit allocation efficiency by easing financing constraints and enhancing investment efficiency. The effects are more pronounced in firms with stronger internal governance and higher transparency, but weaker in those facing severe information frictions. Overall, the evidence underscores that ESG-driven external governance complements internal control mechanisms and contributes to more efficient capital allocation. Strengthening ESG investment and disclosure practices can therefore foster financial efficiency and promote sustainable economic growth in emerging markets.

Suggested Citation

  • Tudi, Tayier & Ni, Mingjie, 2026. "From activism to efficiency: Does ESG shareholder engagement mitigate credit misallocation?," Economic Modelling, Elsevier, vol. 155(C).
    • Handle: RePEc:eee:ecmode:v:155:y:2026:i:c:s0264999325004316
    DOI: 10.1016/j.econmod.2025.107436
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264999325004316
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econmod.2025.107436?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    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
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:155:y:2026:i:c:s0264999325004316. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.