IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i7p6277-d1117064.html

How Does a Regulatory Minority Shareholder Influence the ESG Performance? A Quasi-Natural Experiment

Author

Listed:
  • Di Song

    (Business School, China University of Political Science and Law, Beijing 100088, China)

  • Canyu Xu

    (Business School, East China University of Science and Technology, Shanghai 200237, China)

  • Zewei Fu

    (Business School, China University of Political Science and Law, Beijing 100088, China)

  • Chao Yang

    (School of Accountancy, Beijing Wuzi University, Beijing 101149, China)

Abstract

Based on China’s newly established Securities Investor Services Center (CSISC), a minority shareholder protection mechanism, we investigated how the CSISC shareholder influences the ESG performance of listed companies. Using a difference-in-differences analysis for a sample of Chinese listed companies during 2013–2017, we found that the pilot reform of CSISC shareholding has a positive influence on the ESG performance of listed companies. We also found that this effect exists in large companies and in companies in non-high-polluting industries. Besides, analysts’ attention, external auditing quality, institutional shareholding, and highly-developed market intermediary and legal systems can strengthen the effect of CSISC shareholding on corporate ESG performance. Our findings inspire regulators in emerging markets to establish suitable mechanisms to protect minority shareholder rights in the long run.

Suggested Citation

  • Di Song & Canyu Xu & Zewei Fu & Chao Yang, 2023. "How Does a Regulatory Minority Shareholder Influence the ESG Performance? A Quasi-Natural Experiment," Sustainability, MDPI, vol. 15(7), pages 1-22, April.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:7:p:6277-:d:1117064
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/7/6277/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/7/6277/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Martins, Henrique Castro, 2022. "Competition and ESG practices in emerging markets: Evidence from a difference-in-differences model," Finance Research Letters, Elsevier, vol. 46(PA).
    2. Brower, Jacob & Rowe, Katie, 2017. "Where the eyes go, the body follows?: Understanding the impact of strategic orientation on corporate social performance," Journal of Business Research, Elsevier, vol. 79(C), pages 134-142.
    3. Chen, Tao & Dong, Hui & Lin, Chen, 2020. "Institutional shareholders and corporate social responsibility," Journal of Financial Economics, Elsevier, vol. 135(2), pages 483-504.
    4. Fatemi, Ali & Glaum, Martin & Kaiser, Stefanie, 2018. "ESG performance and firm value: The moderating role of disclosure," Global Finance Journal, Elsevier, vol. 38(C), pages 45-64.
    5. Xu, Shen & Yin, Bichao & Lou, Chunjie, 2022. "Minority shareholder activism and corporate social responsibility," Economic Modelling, Elsevier, vol. 116(C).
    6. Mu, Weiwei & Liu, Kefu & Tao, Yunqing & Ye, Yongwei, 2023. "Digital finance and corporate ESG," Finance Research Letters, Elsevier, vol. 51(C).
    7. DeFond, Mark & Hung, Mingyi & Trezevant, Robert, 2007. "Investor protection and the information content of annual earnings announcements: International evidence," Journal of Accounting and Economics, Elsevier, vol. 43(1), pages 37-67, March.
    8. Hossain, Ashrafee Tanvir & Kryzanowski, Lawrence, 2021. "Political corruption and Corporate Social Responsibility (CSR)," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    9. Huang, Wei & Luo, Yan & Wang, Xiaohuan & Xiao, Lifu, 2022. "Controlling shareholder pledging and corporate ESG behavior," Research in International Business and Finance, Elsevier, vol. 61(C).
    10. 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.
    11. Becker, Martin G. & Martin, Fabio & Walter, Andreas, 2022. "The power of ESG transparency: The effect of the new SFDR sustainability labels on mutual funds and individual investors," Finance Research Letters, Elsevier, vol. 47(PB).
    12. Ahiabor, Frederick S. & James, Gregory A. & Kwabi, Frank O. & Siems, Mathias M., 2018. "Shareholder protection, stock markets and cross-border mergers," Economics Letters, Elsevier, vol. 171(C), pages 54-57.
    13. Brad M. Barber & Terrance Odean, 2000. "Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors," Journal of Finance, American Finance Association, vol. 55(2), pages 773-806, April.
    14. Haidar, Jamal Ibrahim, 2009. "Investor protections and economic growth," Economics Letters, Elsevier, vol. 103(1), pages 1-4, April.
    15. 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).
    16. Xiao, Gang, 2013. "Legal shareholder protection and corporate R&D investment," Journal of Corporate Finance, Elsevier, vol. 23(C), pages 240-266.
    17. Fang, Mingyue & Nie, Huihua & Shen, Xinyi, 2023. "Can enterprise digitization improve ESG performance?," Economic Modelling, Elsevier, vol. 118(C).
    18. Agrawal, Ashwini K., 2013. "The impact of investor protection law on corporate policy and performance: Evidence from the blue sky laws," Journal of Financial Economics, Elsevier, vol. 107(2), pages 417-435.
    19. Kim, Sooin & Yoo, Jungmin, 2022. "Corporate Opacity, Corporate Social Responsibility, and Financial Performance," Finance Research Letters, Elsevier, vol. 49(C).
    20. Cai, Ye & Pan, Carrie H. & Statman, Meir, 2016. "Why do countries matter so much in corporate social performance?," Journal of Corporate Finance, Elsevier, vol. 41(C), pages 591-609.
    21. Jiang, Yahan & Wang, Cai & Li, Sha & Wan, Jing, 2022. "Do institutional investors' corporate site visits improve ESG performance? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 76(C).
    22. Battisti, Enrico & Nirino, Niccolò & Leonidou, Erasmia & Thrassou, Alkis, 2022. "Corporate venture capital and CSR performance: An extended resource based view’s perspective," Journal of Business Research, Elsevier, vol. 139(C), pages 1058-1066.
    23. Beck, Thorsten & Colciago, Andrea & Pfajfar, Damjan, 2014. "The role of financial intermediaries in monetary policy transmission," Journal of Economic Dynamics and Control, Elsevier, vol. 43(C), pages 1-11.
    24. Deng, Xiang & Li, Weihao & Ren, Xiaohang, 2023. "More sustainable, more productive: Evidence from ESG ratings and total factor productivity among listed Chinese firms," Finance Research Letters, Elsevier, vol. 51(C).
    25. Wanyi Chen, 2021. "Are financial derivatives tax havens? Evidence from China," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 17(8), pages 1949-1972, January.
    26. Huang, Jingchang & Cao, June & Hasan, Tahseen & Zhao, Jing, 2021. "Low-carbon city initiatives and firm risk: A quasi-natural experiment in China," Journal of Financial Stability, Elsevier, vol. 57(C).
    27. Broadstock, David C. & Chan, Kalok & Cheng, Louis T.W. & Wang, Xiaowei, 2021. "The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China," Finance Research Letters, Elsevier, vol. 38(C).
    28. Feng, Yumei & Pan, Yuying & Wang, Lu & Sensoy, Ahmet, 2021. "The voice of minority shareholders: Online voting and corporate social responsibility," Research in International Business and Finance, Elsevier, vol. 57(C).
    29. Cheong, Calvin W.H. & Sinnakkannu, Jothee & Ramasamy, Sockalingam, 2017. "Reactive or proactive? Investor sentiment as a driver of corporate social responsibility," Research in International Business and Finance, Elsevier, vol. 42(C), pages 572-582.
    30. Beck, Thorsten & Colciago, Andrea & Pfajfar, Damjan, 2014. "The role of financial intermediaries in monetary policy transmission," Journal of Economic Dynamics and Control, Elsevier, vol. 43(C), pages 1-11.
    31. Zhang, Hongliang & Wang, Mengying & Jiang, Jie, 2017. "Investor protection and stock crash risk," Pacific-Basin Finance Journal, Elsevier, vol. 43(C), pages 256-266.
    32. Chen, Shen & Chen, Yuran & Zhang, Di & Wang, Jinmei, 2023. "Can minority investor activism promote corporate risk-taking? Evidence from a quasi-natural experiment in China," International Review of Financial Analysis, Elsevier, vol. 85(C).
    33. Li, Shihan & Liu, Qingfu & Lu, Lei & Zheng, Kaixin, 2022. "Green policy and corporate social responsibility: Empirical analysis of the Green Credit Guidelines in China," Journal of Asian Economics, Elsevier, vol. 82(C).
    34. Hu, May & Xiong, Wanfang & Xu, Cheng, 2021. "Analyst coverage, corporate social responsibility, and firm value: Evidence from China," Global Finance Journal, Elsevier, vol. 50(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shanshan Yue & Saleh F. A. Khatib & Norkhairul Hafiz Bajuri & Hamid Ghazi H Sulimany & Yini Lee, 2025. "Executive Ownership and Minority Shareholder Protection: Drivers of Environmental Innovation in China's A‐Share Market," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(3), pages 3854-3873, May.
    2. Wang, Muyun & Zhang, Ying, 2024. "Controlling shareholders' equity pledge, litigation risk and corporate ESG performance," International Review of Economics & Finance, Elsevier, vol. 95(C).
    3. Xiong, Wenjing & Zhu, Pingheng & Wen, Fenghua, 2025. "The signalling role of a regulatory minority shareholder exercising rights: Evidence from firm’s bank loans," Research in International Business and Finance, Elsevier, vol. 75(C).

    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. Fu, Xintong & Zhang, Xiangwei, 2025. "Tax burden and enterprises' ESG performance," International Review of Financial Analysis, Elsevier, vol. 103(C).
    2. Zeng, Yongliang & Zhao, Xiangfang & Zhu, Yiwen, 2023. "Equity incentives and ESG performance: Evidence from China," Finance Research Letters, Elsevier, vol. 58(PC).
    3. Wang, Zhen & Tang, Pei, 2024. "Substantive digital innovation or symbolic digital innovation: Which type of digital innovation is more conducive to corporate ESG performance?," International Review of Economics & Finance, Elsevier, vol. 93(PB), pages 1212-1228.
    4. Ma, Rufei & Chen, Yuhua & Ji, Qiang & Zhai, Pengxiang, 2025. "How does environmental regulatory stringency shape ESG? Evidence from cross-listing," International Review of Financial Analysis, Elsevier, vol. 104(PB).
    5. En Xie & Shuang Cao, 2023. "Can network attention effectively stimulate corporate ESG practices?—Evidence from China," PLOS ONE, Public Library of Science, vol. 18(12), pages 1-16, December.
    6. Zhang, Ping & Ma, Binbin & Chi, Chuenyu, 2025. "Institutional investors and ESG performance: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 1159-1181.
    7. Fiorillo, Paolo & Santilli, Gianluca, 2024. "The influence of shareholder ESG performance on corporate sustainability: Exploring the role of ownership structure," Finance Research Letters, Elsevier, vol. 67(PA).
    8. Fangjun Wang & Xinmiao Zhou & Tian Gan, 2024. "Can green funds improve corporate environmental, social, and governance performance? Evidence from Chinese-listed companies," PLOS ONE, Public Library of Science, vol. 19(3), pages 1-32, March.
    9. 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.
    10. Wang, Zhiwen, 2025. "The impact of common ownership between banks and firms on corporate ESG performance: Evidence from China," Emerging Markets Review, Elsevier, vol. 69(C).
    11. Zhu, Bo & Wang, Yansen, 2024. "Does social trust affect firms' ESG performance?," International Review of Financial Analysis, Elsevier, vol. 93(C).
    12. Zhu, Ruoyu & Tan, Kehu & Xin, Xiaohui, 2024. "Speed up for sustainable development: High-speed rail and corporate ESG performance," Energy Economics, Elsevier, vol. 138(C).
    13. 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.
    14. Renhong Wu & Jinbao Li & Yunhai Dai & Xiangdong Shen & Md. Alamgir Hossain, 2024. "Impact of Environmental, Social, and Governance on Innovation in Chinese Listed Firms," Sustainability, MDPI, vol. 16(17), pages 1-24, August.
    15. Linzhi Han & Yafang Shi & Jianghua Zheng, 2024. "Can green credit policies improve corporate ESG performance?," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(3), pages 2678-2699, June.
    16. Xiaofeng Liu & Zhi Wang & Shichi Ren, 2024. "Investor–Firm Interactions and Corporate ESG Performance: Evidence from China," Sustainability, MDPI, vol. 16(24), pages 1-33, December.
    17. Lingling Cao & Hong Jiang & Huawei Niu, 2024. "The Co-Inhibiting Effect of Managerial Myopia on ESG Performance-Based Green Investment and Continuous Innovation," Sustainability, MDPI, vol. 16(18), pages 1-20, September.
    18. Guo, Kun & Li, Yichong & Zhang, Yunhan & Chen, Yingtong & Ma, Yanran, 2024. "Cross-country risk spillovers of ESG stock indices: Dynamic patterns and the role of climate transition risks," International Review of Financial Analysis, Elsevier, vol. 95(PB).
    19. Li, Mangmang & Tang, Jinghua & Wu, Dingwen, 2025. "Beyond borders and industries: How cross-ownership drives ESG performance in China’ low-polluting firms after environmental regulation," Energy Economics, Elsevier, vol. 148(C).
    20. Xiangwei Xie & Hongyu Zhu & Jinjing Zhao, 2024. "How effective is digital transformation? Heterogeneous insights from listed companies’ ESG performance," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    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:gam:jsusta:v:15:y:2023:i:7:p:6277-:d:1117064. 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.