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State ownership and the value of sustainability: Evidence from China

Author

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  • Wu, Zhenshu
  • Pownall, Rachel
  • Shih, Yi-Cheng
  • Zhang, Chendi

Abstract

This study examines the impact of state ownership on the performance of environmental and social (ES) stocks in China's stock markets. Using the COVID-19 market crash as an exogenous shock, we find that ES positively impacts stock returns for non-state-owned enterprises (non-SOEs); however, this effect is absent for state-owned enterprises (SOEs). The ES effect in non-SOEs concentrates on firms with strong employee relations and is more pronounced in those with high institutional ownership, financial constraints, and bankruptcy risk. In the long term, we also find that ES performance boosts stock returns for non-SOEs, but not for SOEs. These results suggest that ES investments by SOEs may be driven by non-economic motivations.

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  • Wu, Zhenshu & Pownall, Rachel & Shih, Yi-Cheng & Zhang, Chendi, 2025. "State ownership and the value of sustainability: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:finana:v:102:y:2025:i:c:s1057521925002297
    DOI: 10.1016/j.irfa.2025.104142
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    Keywords

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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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