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The Moderating Role of Ownership Concentration on Financing Decisions and Firm’s Sustainability: Evidence from China

Author

Listed:
  • Kankan Wen

    (School of Chinese Language and Literature, Ningxia Normal University, Guyuan 756000, China)

  • Andrew Agyemang

    (School of Business, SDD—University of Business and Integrated Development Studies, Wa P. O. Box WA64, Ghana)

  • Noha Alessa

    (Department of Accounting, College of Business and Administration, Princess Nourah bint Abdulrahman University, P. O. Box 84428, Riyadh 11671, Saudi Arabia)

  • Inusah Sulemana

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

  • Abednego Osei

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

Abstract

We examined the impact of financing decisions on a firm’s sustainability in China as it aspires to achieve carbon neutrality. To proxy firms’ sustainability performance, we proposed an index for environmental, social, and governance (ESG) performance. The financing decision was proxied by debt funding and equity funding. Using secondary data from China Stock Market Accounting Data from 2016 to 2022, we utilize the fixed effect and fully modified ordinary least squares estimators for the empirical analysis. The analysis indicated a favorable link between debt funding and ESG performance. We uncovered an inconsistent association between equity funding and ESG performance. Moreover, ownership concentration revealed a significant role in moderating the impact of debt financing and ESG performance in China. The findings affirm that firms should rely on debt funding rather than equity funding to enhance their ESG performance. Hence, policymakers should enact laws allowing easy access to debt funding for companies to ensure higher ESG performance. This, in the long term, will contribute to the Chinese dream of carbon neutrality.

Suggested Citation

  • Kankan Wen & Andrew Agyemang & Noha Alessa & Inusah Sulemana & Abednego Osei, 2023. "The Moderating Role of Ownership Concentration on Financing Decisions and Firm’s Sustainability: Evidence from China," Sustainability, MDPI, vol. 15(18), pages 1-14, September.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:18:p:13385-:d:1234545
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    References listed on IDEAS

    as
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    Cited by:

    1. Jian Wang & Yuzhen Zhang & Angelina Kissiwaa Twum & Andrew Osei Agyemang, 2024. "Realizing sustainable development goals in sub‐Saharan Africa: The role of industrialization on consumption‐based carbon emission," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(3), pages 2666-2677, June.
    2. Li KaoDui & Maxwell Kongkuah & Noha Alessa, 2025. "Beyond Compliance: How Board–Ownership Structures and Eco‐Technology Intensity Drive Circular Economy Performance in MENA Firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(5), pages 6658-6679, September.
    3. Wu Ning & Ummar Faruk Saeed & Angelina Kissiwaa Twum & Abednego Osei, 2024. "Can ESG disclosures promote firms going concern? Evidence from BRICS countries," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 3792-3803, September.
    4. Ummar Faruk Saeed & Wu Ning & Andrew Osei Agyemang, 2025. "Advancing Sustainable Development Goal 15: The Role of Corporate Governance Structures and Environmental Regulations in Emerging Economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(3), pages 3403-3426, June.
    5. Abednego Osei & Naiping Zhu & Andrew Osei Agyemang, 2025. "Advancing Business Ethical Standards: Unpacking the Synergistic Influence of Governance Structures and CSR Engagement on Corporate Integrity in BRICS Countries," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(3), pages 3471-3494, May.
    6. Seonhyeon Kim & Jin-young Jung & Sung-woo Cho, 2024. "The Influence of Ownership Concentration on Sustainable Merger and Acquisition Performance: Navigating Principal Conflicts in the Korean Market," Sustainability, MDPI, vol. 16(12), pages 1-20, June.
    7. Joana Cobbinah & Abednego Osei & Joseph Owusu Amoah, 2026. "Innovating for a Greener Future: Do Digital Transformation and Innovation Capacity Drive Enterprise Green Total Factor Productivity in the Knowledge Economy?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 17(1), pages 325-363, February.
    8. Dejun Zhou & Abednego Osei & Andrew Osei Agyemang & Ishmael Wiredu, 2026. "Strategic ESG Disclosure as Sustainability Innovation: A Diffusion Perspective on Advancing Responsible Consumption and Production Toward SDG 12," Sustainable Development, John Wiley & Sons, Ltd., vol. 34(1), pages 968-992, February.
    9. Guanghui Chang & Ishmael Wiredu & Prince Kofi Boadu & Andrew Osei Agyemang, 2026. "Navigating sustainable development: exploring the nexus of board attributes and environmental accounting information disclosure in China’s construction industry," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 28(4), pages 10021-10046, April.
    10. Abednego Osei & Naiping Zhu & Hela Borgi & Joana Cobbinah, 2025. "Empowering Sustainable Production: Firm Governance, Finance Strategies, and Tech‐Innovation in Advancing Circular Economy for SDG 12 in the US, China and Japan," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(4), pages 5282-5307, August.
    11. Naiping Zhu & Jinlan Yang & Andrew Osei Agyemang, 2025. "Unveiling sustainability: Tech‐infused governance and ESG performance in textile industry," Business Ethics, the Environment & Responsibility, John Wiley & Sons, Ltd., vol. 34(4), pages 1156-1170, October.
    12. Naiping Zhu & Abednego Osei & Andrew Osei Agyemang, 2024. "Do board attributes influence environmental sustainability disclosure in manufacturing firms? Evidence from sub‐Saharan Africa," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4759-4771, September.

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