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Institutional ownership heterogeneity and ESG performance: Evidence from China

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  • Wang, Yizhi
  • Lin, Yongjia
  • Fu, Xiaoqing
  • Chen, Songhe

Abstract

This paper examines whether institutional investors affect the environment, social, and governance (ESG) performance of Chinese-listed companies. We show that institutional ownership is significantly and positively related to corporate ESG performance. We further classify institutional investors into four different types, based on investment horizons and business relationships, and find that the positive relationship between institutional ownership and ESG performance is mainly driven by long-term pressure-insensitive institutional investors and short-term pressure-sensitive institutional investors. Further evidence suggests that such an association is especially evident among firms in regions with high levels of economic development and marketization.

Suggested Citation

  • Wang, Yizhi & Lin, Yongjia & Fu, Xiaoqing & Chen, Songhe, 2023. "Institutional ownership heterogeneity and ESG performance: Evidence from China," Finance Research Letters, Elsevier, vol. 51(C).
    • Handle: RePEc:eee:finlet:v:51:y:2023:i:c:s1544612322006250
    DOI: 10.1016/j.frl.2022.103448
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    5. Liliana Rivera & Norma Ortiz & Gabriel Moreno & Iliana Páez-Gabriunas, 2023. "The Effect of Company Ownership on the Environmental Practices in the Supply Chain: An Empirical Approach," Sustainability, MDPI, vol. 15(16), pages 1-24, August.
    6. Xia, Dehua & Shi, Junfeng, 2024. "Individual investors’ online voice and corporate environmental information disclosure," Finance Research Letters, Elsevier, vol. 62(PB).
    7. Wang, Kai & Chen, Xi & Wang, Chenye, 2023. "The impact of sustainable development planning in resource-based cities on corporate ESG–Evidence from China," Energy Economics, Elsevier, vol. 127(PA).
    8. Li, Yujie & Hua, Ziyan, 2024. "Environmental protection tax law and corporate ESG performance," Finance Research Letters, Elsevier, vol. 64(C).
    9. Cantero-Saiz, María & Polizzi, Salvatore & Scannella, Enzo, 2024. "ESG and asset quality in the banking industry: The moderating role of financial performance," Research in International Business and Finance, Elsevier, vol. 69(C).
    10. Liu, Xiaoqian & Cifuentes-Faura, Javier & Zhao, Shikuan & Wang, Long, 2024. "The impact of government environmental attention on firms’ ESG performance: Evidence from China," Research in International Business and Finance, Elsevier, vol. 67(PA).
    11. Zhu, Bo & Wang, Yansen, 2024. "Does social trust affect firms' ESG performance?," International Review of Financial Analysis, Elsevier, vol. 93(C).
    12. Jiajia Liu & Zhenzhen Ge & Yahan Wang, 2024. "Role of environmental, social, and governance rating data in predicting financial risk and risk management," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 260-273, January.
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    15. Yunfu Zhu & Haoling Yang & Ma Zhong, 2023. "Do ESG Ratings of Chinese Firms Converge or Diverge? A Comparative Analysis Based on Multiple Domestic and International Ratings," Sustainability, MDPI, vol. 15(16), pages 1-17, August.
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    19. 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

    Institutional ownership heterogeneity; ESG performance; Investment horizon; Business relationship;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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