IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i15p11507-d1202151.html
   My bibliography  Save this article

State-Owned Equity Participation and Corporations’ ESG Performance in China: The Mediating Role of Top Management Incentives

Author

Listed:
  • Ting Qian

    (Economic and Management College, Beijing University of Technology, Beijing 100124, China)

  • Caoyuan Yang

    (Economic and Management College, Beijing University of Technology, Beijing 100124, China)

Abstract

This study examined the unique circumstances surrounding state-owned equity participation in enterprises in China. Specifically, this study examined the impact of state-owned equity participation on the environmental, social, and governance (ESG) performance of enterprises. Focusing on A-share listed firms on the Shanghai and Shenzhen Stock Exchanges, and using data from 2013 to 2021, the results of our empirical testing showed that state-owned equity participation could significantly improve the ESG performance of enterprises, with this conclusion remaining reliable after a series of robustness tests. Top management incentives were a mediating mechanism for state-owned equity participation in enhancing ESG performance. This study also found that when state-owned equity participated in large enterprises, or companies with a high degree of digital transformation, the effect on the ESG performance was greater than in small or medium-sized enterprises, or enterprises with a low level of digital transformation. The findings of this study add to the current body of research on the factors influencing corporate ESG performance, and the impact of state-owned equity on corporate non-financial performance.

Suggested Citation

  • Ting Qian & Caoyuan Yang, 2023. "State-Owned Equity Participation and Corporations’ ESG Performance in China: The Mediating Role of Top Management Incentives," Sustainability, MDPI, vol. 15(15), pages 1-21, July.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:15:p:11507-:d:1202151
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/15/11507/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/15/11507/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Boubakri, Narjess & Saffar, Walid, 2019. "State Ownership and Debt Choice: Evidence from Privatization," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 54(3), pages 1313-1346, June.
    2. Fatemi, Ali & Fooladi, Iraj & Tehranian, Hassan, 2015. "Valuation effects of corporate social responsibility," Journal of Banking & Finance, Elsevier, vol. 59(C), pages 182-192.
    3. Najah Attig & Sadok El Ghoul & Omrane Guedhami, 2009. "Do Multiple Large Shareholders Play A Corporate Governance Role? Evidence From East Asia," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 32(4), pages 395-422, December.
    4. Samuel Drempetic & Christian Klein & Bernhard Zwergel, 2020. "The Influence of Firm Size on the ESG Score: Corporate Sustainability Ratings Under Review," Journal of Business Ethics, Springer, vol. 167(2), pages 333-360, November.
    5. Remmer Sassen & Anne-Kathrin Hinze & Inga Hardeck, 2016. "Impact of ESG factors on firm risk in Europe," Journal of Business Economics, Springer, vol. 86(8), pages 867-904, November.
    6. Zhou, Bing & Li, Yu-meng & Sun, Fang-cheng & Zhou, Zhong-guo, 2021. "Executive compensation incentives, risk level and corporate innovation," Emerging Markets Review, Elsevier, vol. 47(C).
    7. Marco Pagano & Ailsa Röell, 1998. "The Choice of Stock Ownership Structure: Agency Costs, Monitoring, and the Decision to Go Public," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(1), pages 187-225.
    8. Dorothée Baumann-Pauly & Christopher Wickert & Laura Spence & Andreas Scherer, 2013. "Organizing Corporate Social Responsibility in Small and Large Firms: Size Matters," Journal of Business Ethics, Springer, vol. 115(4), pages 693-705, July.
    9. Jay B. Barney, 2018. "Why resource‐based theory's model of profit appropriation must incorporate a stakeholder perspective," Strategic Management Journal, Wiley Blackwell, vol. 39(13), pages 3305-3325, December.
    10. El Ghoul, Sadok & Guedhami, Omrane & Kwok, Chuck C.Y. & Mishra, Dev R., 2011. "Does corporate social responsibility affect the cost of capital?," Journal of Banking & Finance, Elsevier, vol. 35(9), pages 2388-2406, September.
    11. Mark Cordano & R. Marshall & Murray Silverman, 2010. "How do Small and Medium Enterprises Go “Green”? A Study of Environmental Management Programs in the U.S. Wine Industry," Journal of Business Ethics, Springer, vol. 92(3), pages 463-478, March.
    12. Markus Fitza & Laszlo Tihanyi, 2017. "How Much Does Ownership Form Matter?," Strategic Management Journal, Wiley Blackwell, vol. 38(13), pages 2726-2743, December.
    13. Wu, Keping & Fu, Yumei & Kong, Dongmin, 2022. "Does the digital transformation of enterprises affect stock price crash risk?," Finance Research Letters, Elsevier, vol. 48(C).
    14. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    15. Birger Wernerfelt, 1984. "A resource‐based view of the firm," Strategic Management Journal, Wiley Blackwell, vol. 5(2), pages 171-180, April.
    16. Michael N. Young & Mike W. Peng & David Ahlstrom & Garry D. Bruton & Yi Jiang, 2008. "Corporate Governance in Emerging Economies: A Review of the Principal–Principal Perspective," Journal of Management Studies, Wiley Blackwell, vol. 45(1), pages 196-220, January.
    17. Ferreira, João J.M. & Fernandes, Cristina I. & Ferreira, Fernando A.F., 2019. "To be or not to be digital, that is the question: Firm innovation and performance," Journal of Business Research, Elsevier, vol. 101(C), pages 583-590.
    18. Dyck, Alexander & Lins, Karl V. & Roth, Lukas & Wagner, Hannes F., 2019. "Do institutional investors drive corporate social responsibility? International evidence," Journal of Financial Economics, Elsevier, vol. 131(3), pages 693-714.
    19. Kusnadi, Yuanto & Yang, Zhifeng & Zhou, Yuxiao, 2015. "Institutional development, state ownership, and corporate cash holdings: Evidence from China," Journal of Business Research, Elsevier, vol. 68(2), pages 351-359.
    20. Yan Zhang & Nandini Rajagopalan, 2010. "Once an outsider, always an outsider? CEO origin, strategic change, and firm performance," Strategic Management Journal, Wiley Blackwell, vol. 31(3), pages 334-346, March.
    21. Ellen Pei‐yi Yu & Christine Qian Guo & Bac Van Luu, 2018. "Environmental, social and governance transparency and firm value," Business Strategy and the Environment, Wiley Blackwell, vol. 27(7), pages 987-1004, November.
    22. Breuer, Wolfgang & Müller, Torbjörn & Rosenbach, David & Salzmann, Astrid, 2018. "Corporate social responsibility, investor protection, and cost of equity: A cross-country comparison," Journal of Banking & Finance, Elsevier, vol. 96(C), pages 34-55.
    23. Yingjia Zhong & Hongyan Zhao & Tianbao Yin, 2023. "Resource Bundling: How Does Enterprise Digital Transformation Affect Enterprise ESG Development?," Sustainability, MDPI, vol. 15(2), pages 1-18, January.
    24. Luc Laeven & Ross Levine, 2008. "Complex Ownership Structures and Corporate Valuations," The Review of Financial Studies, Society for Financial Studies, vol. 21(2), pages 579-604, April.
    25. Kai Chang & Xiaochang Cheng & Yiran Wang & Qiming Liu & Jie Hu, 2023. "The impacts of ESG performance and digital finance on corporate financing efficiency in China," Applied Economics Letters, Taylor & Francis Journals, vol. 30(4), pages 516-523, February.
    26. Marianne Bertrand & Paras Mehta & Sendhil Mullainathan, 2002. "Ferreting out Tunneling: An Application to Indian Business Groups," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 121-148.
    27. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    28. Yuan Yuan Hu & Yanhui Zhu & Jon Tucker & Yuxiao Hu, 2018. "Ownership influence and CSR disclosure in China," Accounting Research Journal, Emerald Group Publishing Limited, vol. 31(1), pages 8-21, May.
    29. Aluchna, Maria & Roszkowska-Menkes, Maria & Kamiński, Bogumił & Bosek-Rak, Dominika, 2022. "Do institutional investors encourage firm to social disclosure? The stakeholder salience perspective," Journal of Business Research, Elsevier, vol. 142(C), pages 674-682.
    30. Jeremy Galbreath, 2013. "ESG in Focus: The Australian Evidence," Journal of Business Ethics, Springer, vol. 118(3), pages 529-541, December.
    31. Detmar W. Straub & Richard T. Watson, 2001. "Research Commentary: Transformational Issues in Researching IS and Net-Enabled Organizations," Information Systems Research, INFORMS, vol. 12(4), pages 337-345, December.
    32. Fang Yang & Xu Li, 2023. "Corporate Financialization, ESG Performance and Sustainability Development: Evidence from Chinese-Listed Companies," Sustainability, MDPI, vol. 15(4), pages 1-28, February.
    33. Ricardo Francisco Reier Forradellas & Luis Miguel Garay Gallastegui, 2021. "Digital Transformation and Artificial Intelligence Applied to Business: Legal Regulations, Economic Impact and Perspective," Laws, MDPI, vol. 10(3), pages 1-22, August.
    34. Ningning Kong & Yu Bao & Yiyuan Sun & Yawen Wang, 2023. "Corporations’ ESG for Sustainable Investment in China: The Moderating Role of Regional Marketization," Sustainability, MDPI, vol. 15(4), pages 1-22, February.
    35. Shuping Li, 2018. "Increased non‐family ownership in family‐owned firms: How does it affect CEO turnover‐performance sensitivity?," Strategic Management Journal, Wiley Blackwell, vol. 39(13), pages 3434-3457, December.
    36. Fu, Xiaolan, 2012. "How does openness affect the importance of incentives for innovation?," Research Policy, Elsevier, vol. 41(3), pages 512-523.
    37. Anthony P Cannizzaro & Robert J Weiner, 2018. "State ownership and transparency in foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(2), pages 172-195, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. El Ghoul, Sadok & Guedhami, Omrane & Wang, He & Kwok, Chuck C.Y., 2016. "Family control and corporate social responsibility," Journal of Banking & Finance, Elsevier, vol. 73(C), pages 131-146.
    2. Sabri Boubaker & Hind Sami, 2011. "Multiple large shareholders and earnings informativeness," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 10(3), pages 246-266, August.
    3. Chandera, Yane & Setia-Atmaja, Lukas & Utama, Cynthia Afriani & Husodo, Zaäfri Ananto, 2021. "Ownership dispersion across large shareholders and loan-syndicate structure," Research in International Business and Finance, Elsevier, vol. 55(C).
    4. Sabri Boubaker & Riadh Manita & Wael Rouatbi, 2021. "Large shareholders, control contestability and firm productive efficiency," Annals of Operations Research, Springer, vol. 296(1), pages 591-614, January.
    5. Mário Santos & António Moreira & Elisabete Vieira, 2014. "Ownership concentration, contestability, family firms, and capital structure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(4), pages 1063-1107, November.
    6. Minghui Yang & Yan Wang & Lu Bai & Petra Maresova, 2023. "Corporate social responsibility, family involvement, and stock price crash risk," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(3), pages 1204-1225, May.
    7. Jiang, Fuxiu & Ma, Yunbiao & Wang, Xue, 2020. "Multiple blockholders and earnings management," Journal of Corporate Finance, Elsevier, vol. 64(C).
    8. Fiordelisi, Franco & Ricci, Ornella & Santilli, Gianluca, 2023. "Environmental engagement and stock price crash risk: Evidence from the European banking industry," International Review of Financial Analysis, Elsevier, vol. 88(C).
    9. Sabri Boubaker & Pascal Nguyen & Wael Rouatbi, 2016. "Multiple Large Shareholders and Corporate Risk†taking: Evidence from French Family Firms," European Financial Management, European Financial Management Association, vol. 22(4), pages 697-745, September.
    10. Chen, Fengqin & Huyghebaert, Nancy & Lin, Sen & Wang, Lihong, 2019. "Do multiple large shareholders reduce agency problems in state-controlled listed firms? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).
    11. Di Cai & Jin-hui Luo & Di-fang Wan, 2012. "Family CEOs: Do they benefit firm performance in China?," Asia Pacific Journal of Management, Springer, vol. 29(4), pages 923-947, December.
    12. Fuxiu Jiang & Kenneth A Kim, 2020. "Corporate Governance in China: A Survey [The role of boards of directors in corporate governance: a conceptual framework and survey]," Review of Finance, European Finance Association, vol. 24(4), pages 733-772.
    13. Jiang, Fuxiu & Cai, Wenjing & Wang, Xue & Zhu, Bing, 2018. "Multiple large shareholders and corporate investment: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 66-83.
    14. Ben-Nasr, Hamdi & Boubaker, Sabri & Rouatbi, Wael, 2015. "Ownership structure, control contestability, and corporate debt maturity," Journal of Corporate Finance, Elsevier, vol. 35(C), pages 265-285.
    15. Jiang, Fuxiu & Kim, Kenneth A. & Nofsinger, John R. & Zhu, Bing, 2017. "A pecking order of shareholder structure," Journal of Corporate Finance, Elsevier, vol. 44(C), pages 1-14.
    16. Rossi, Fabrizio & Barth, James R. & Cebula, Richard J., 2018. "Do shareholder coalitions affect agency costs? Evidence from Italian-listed companies," Research in International Business and Finance, Elsevier, vol. 46(C), pages 181-200.
    17. Najah Attig & Sadok El Ghoul & Omrane Guedhami & Sorin Rizeanu, 2013. "The governance role of multiple large shareholders: evidence from the valuation of cash holdings," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(2), pages 419-451, May.
    18. Cao, Feng & Peng, Songlan (Stella) & Ye, Kangtao, 2019. "Multiple large shareholders and corporate social responsibility reporting," Emerging Markets Review, Elsevier, vol. 38(C), pages 287-309.
    19. Boubaker, Sabri & Cellier, Alexis & Rouatbi, Wael, 2014. "The sources of shareholder wealth gains from going private transactions: The role of controlling shareholders," Journal of Banking & Finance, Elsevier, vol. 43(C), pages 226-246.
    20. Bian, Wenlong & Ren, Yan & Zhang, Hao, 2022. "Do multiple large shareholders matter in financial firms? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).

    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:gam:jsusta:v:15:y:2023:i:15:p:11507-:d:1202151. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.