IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v17y2025i10p4461-d1655587.html
   My bibliography  Save this article

Institutional Cross-Ownership and Corporate Sustainability Performance: Empirical Evidence Based on United Nations SDGs Ratings

Author

Listed:
  • Miaomiao Yi

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

  • Fei Ren

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

  • Zhang-Hangjian Chen

    (School of Economics, Anhui University, Hefei 230601, China)

Abstract

Corporate sustainable development, as a critical component of Chinese-style modernization, is essential for achieving high-quality economic growth, yet the influence of institutional cross-ownership—a prevalent phenomenon in stock markets—on corporate sustainability performance remains contested. Using a sample of Chinese A-share listed companies from 2012 to 2023, this study innovatively employs micro-level data on the degree of the achievement of the United Nations Sustainable Development Goals (SDGs) to measure corporate sustainability performance and investigate the influence of institutional cross-ownership on corporate sustainability performance. This study presents the following findings: (1) Institutional cross-ownership undermines corporate sustainability performance, a finding that remains robust to a series of endogeneity and robustness tests. (2) Mechanism analysis reveals a triple erosion effect: short-termism driven by institutional investors’ preference for immediate financial returns, market power through cross-ownership that dampens competitive pressures, and reduced green innovation investments that weaken sustainability. (3) This negative effect is more pronounced in firms located in high-productivity regions or central and eastern China, in firms facing lax environmental regulations, and in state-owned enterprises. (4) The impact of cross-ownership on sustainability performance varies across dimensions, with the negative effects concentrated in the economic and social dimensions. This study enriches the literature on the factors influencing corporate sustainability performance, providing new empirical evidence for governments to guide institutional investors in long-term value investment and firms to implement effective sustainable development strategies.

Suggested Citation

  • Miaomiao Yi & Fei Ren & Zhang-Hangjian Chen, 2025. "Institutional Cross-Ownership and Corporate Sustainability Performance: Empirical Evidence Based on United Nations SDGs Ratings," Sustainability, MDPI, vol. 17(10), pages 1-22, May.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:10:p:4461-:d:1655587
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/17/10/4461/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/17/10/4461/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Brian Bushee, 2004. "Identifying and Attracting the "right" Investors: Evidence on the Behavior of Institutional Investors," Journal of Applied Corporate Finance, Morgan Stanley, vol. 16(4), pages 28-35.
    2. José Azar & Xavier Vives, 2021. "General Equilibrium Oligopoly and Ownership Structure," Econometrica, Econometric Society, vol. 89(3), pages 999-1048, May.
    3. Efrat Dressler & Yevgeny Mugerman, 2023. "Doing the Right Thing? The Voting Power Effect and Institutional Shareholder Voting," Journal of Business Ethics, Springer, vol. 183(4), pages 1089-1112, April.
    4. Xiaoxu Zhang & Xinyu Du, 2023. "Industry and Regional Peer Effects in Corporate Digital Transformation: The Moderating Effects of TMT Characteristics," Sustainability, MDPI, vol. 15(7), pages 1-22, March.
    5. Rui Zhou & Jiajun Lou & Bing He, 2025. "Greening Corporate Environmental, Social, and Governance Performance: The Impact of China’s Carbon Emissions Trading Pilot Policy on Listed Companies," Sustainability, MDPI, vol. 17(3), pages 1-21, January.
    6. Sihai Li & Xianzhong Song & Huiying Wu, 2015. "Political Connection, Ownership Structure, and Corporate Philanthropy in China: A Strategic-Political Perspective," Journal of Business Ethics, Springer, vol. 129(2), pages 399-411, June.
    7. Eli Berman & Linda T. M. Bui, 2001. "Environmental Regulation And Productivity: Evidence From Oil Refineries," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 498-510, August.
    8. He, Jie (Jack) & Huang, Jiekun & Zhao, Shan, 2019. "Internalizing governance externalities: The role of institutional cross-ownership," Journal of Financial Economics, Elsevier, vol. 134(2), pages 400-418.
    9. Hansen, Robert G. & Lott, John R., 1996. "Externalities and Corporate Objectives in a World with Diversified Shareholder/Consumers," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 31(1), pages 43-68, March.
    10. Xuemei Xie & Qiwei Zhu, 2020. "Exploring an innovative pivot: How green training can spur corporate sustainability performance," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2432-2449, September.
    11. Wenjuan Su & Jiyu Yu & Lingyun Zhao, 2025. "Can Sci-Tech Finance Policy Boost Corporate ESG Performance? Evidence from the Pilot Experiment of Promoting the Integration of Technology and Finance in China," Sustainability, MDPI, vol. 17(6), pages 1-30, March.
    12. Amal Aouadi & Sylvain Marsat, 2018. "Do ESG Controversies Matter for Firm Value? Evidence from International Data," Post-Print halshs-02007374, HAL.
    13. José Azar & Xavier Vives, 2021. "Reply to: Comments on “General Equilibrium Oligopoly and Ownership Structure”," Econometrica, Econometric Society, vol. 89(3), pages 1061-1063, May.
    14. Feng Zhang & Lei Zhu, 2019. "Enhancing corporate sustainable development: Stakeholder pressures, organizational learning, and green innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 28(6), pages 1012-1026, September.
    15. Husted, Bryan W. & Sousa-Filho, José Milton de, 2019. "Board structure and environmental, social, and governance disclosure in Latin America," Journal of Business Research, Elsevier, vol. 102(C), pages 220-227.
    16. Leona Aimée Henry & Tine Buyl & Rob J.G. Jansen, 2019. "Leading corporate sustainability: The role of top management team composition for triple bottom line performance," Business Strategy and the Environment, Wiley Blackwell, vol. 28(1), pages 173-184, January.
    17. Yiying Wang & Derek D. Wang, 2025. "The Dual Path of the Impact of Digital Technology Adoption on ESG Performance," Sustainability, MDPI, vol. 17(6), pages 1-24, March.
    18. Amir Barnea & Amir Rubin, 2010. "Corporate Social Responsibility as a Conflict Between Shareholders," Journal of Business Ethics, Springer, vol. 97(1), pages 71-86, November.
    19. Amal Aouadi & Sylvain Marsat, 2018. "Do ESG Controversies Matter for Firm Value? Evidence from International Data," Journal of Business Ethics, Springer, vol. 151(4), pages 1027-1047, September.
    20. Marcin Kacperczyk & Clemens Sialm & Lu Zheng, 2005. "On the Industry Concentration of Actively Managed Equity Mutual Funds," Journal of Finance, American Finance Association, vol. 60(4), pages 1983-2011, August.
    21. Cheng, Xin & (Helen) Wang, He & Wang, Xianjue, 2022. "Common institutional ownership and corporate social responsibility," Journal of Banking & Finance, Elsevier, vol. 136(C).
    22. Zhao, Xiaoxia & Cai, Lianghui, 2023. "Digital transformation and corporate ESG: Evidence from China," Finance Research Letters, Elsevier, vol. 58(PA).
    23. Brooks, Chris & Chen, Zhong & Zeng, Yeqin, 2018. "Institutional cross-ownership and corporate strategy: The case of mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 48(C), pages 187-216.
    24. Claude Francoeur & Réal Labelle & Souha Balti & Saloua EL Bouzaidi, 2019. "To What Extent Do Gender Diverse Boards Enhance Corporate Social Performance?," Journal of Business Ethics, Springer, vol. 155(2), pages 343-357, March.
    25. Koch, Andrew & Panayides, Marios & Thomas, Shawn, 2021. "Common ownership and competition in product markets," Journal of Financial Economics, Elsevier, vol. 139(1), pages 109-137.
    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. Mou, Shaobo & Yi, Sijia & Zhang, Qiufeng & Liu, Danping, 2025. "Common institutional ownership and executive pay-performance sensitivity: Mediating role of information transparency and fund occupation," Research in International Business and Finance, Elsevier, vol. 74(C).
    2. Ruichang Lu & Qiaowei Shen & Tenghui Wang & Xiaojun Zhang, 2022. "Frenemies: Corporate Advertising Under Common Ownership," Management Science, INFORMS, vol. 68(6), pages 4645-4669, June.
    3. Kristopher Gerardi & Michelle Lowry & Carola Schenone, 2023. "A Critical Review of the Common Ownership Literature," FRB Atlanta Working Paper 2023-17, Federal Reserve Bank of Atlanta.
    4. Ning, Zihao & Xu, Zhibo & Zheng, Pengju, 2024. "The impact of common institutional ownership on financialization in non-financial enterprise: Exacerbation or inhibition?," Finance Research Letters, Elsevier, vol. 69(PB).
    5. Dai, Jingwen & Xu, Rong & Zhu, Tianqi & Lu, Chao, 2024. "Common institutional ownership and opportunistic insider selling: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 88(C).
    6. Xu, Tianli & Xu, Longbing & Zhu, Siyuan, 2023. "Common ownership and executive pay-for-performance sensitivity: Evidence from China," Research in International Business and Finance, Elsevier, vol. 65(C).
    7. Chen, Shenglan & Ma, Hui & Wu, Qiang & Zhang, Hao, 2023. "Does common ownership constrain managerial rent extraction? Evidence from insider trading profitability," Journal of Corporate Finance, Elsevier, vol. 80(C).
    8. Gibbon, Alexandra J. & Schain, Jan Philip, 2023. "Rising markups, common ownership, and technological capacities," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    9. Sun, Ying & Chen, Hongling & He, Wenli, 2024. "Common institutional ownership and corporate cost stickiness —Evidence from China," International Review of Economics & Finance, Elsevier, vol. 96(PC).
    10. Anshul Mandliya & Jatin Pandey & Shrihari Suresh Sohani & Rayees Ahmad Sheikh, 2025. "From union clout to corporate couture: Unveiling the impact of trade unions on corporate social responsibility," PLOS ONE, Public Library of Science, vol. 20(1), pages 1-19, January.
    11. Hamza Nizar & Taher Hamza & Faten Lakhal, 2024. "How does institutional cross‐ownership affect firm productivity? The importance of the corporate social responsibility channel," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 1988-2010, April.
    12. Hennig, Jan C. & Oehmichen, Jana & Steinberg, Philip J. & Heigermoser, Judith, 2022. "Determinants of common ownership: Exploring an information-based and a competition-based perspective in a global context," Journal of Business Research, Elsevier, vol. 144(C), pages 690-702.
    13. Tang, Xudong & Jia, Yang & Li, Rui, 2024. "Common institutional ownership types and corporate innovation: A taxonomy based on whether the investees are in the same industry," Pacific-Basin Finance Journal, Elsevier, vol. 86(C).
    14. Cheng, Xin & (Helen) Wang, He & Wang, Xianjue, 2022. "Common institutional ownership and corporate social responsibility," Journal of Banking & Finance, Elsevier, vol. 136(C).
    15. Yishan Liu & Xingao Xu & Hongbo Hai & Hadi Hussain, 2025. "Does Shared Institutional Equity Enhance Corporate Eco-Transparency Reporting? Evidence from Firm Life Cycles Stages," Sustainability, MDPI, vol. 17(2), pages 1-36, January.
    16. Nadine Gatzert & Philipp Reichel, 2022. "Awareness of climate risks and opportunities: empirical evidence on determinants and value from the U.S. and European insurance industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(1), pages 5-26, January.
    17. Tan, Yafei & Zhu, Zhaohui, 2022. "The effect of ESG rating events on corporate green innovation in China: The mediating role of financial constraints and managers' environmental awareness," Technology in Society, Elsevier, vol. 68(C).
    18. Valentina Marano & Steve Sauerwald & Marc Essen, 2022. "The influence of culture on the relationship between women directors and corporate social performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(7), pages 1315-1342, September.
    19. Francesco Gangi & Mario Mustilli & Lucia Michela Daniele & Maria Coscia, 2022. "The sustainable development of the aerospace industry: Drivers and impact of corporate environmental responsibility," Business Strategy and the Environment, Wiley Blackwell, vol. 31(1), pages 218-235, January.
    20. Han Long & Gen-Fu Feng & Chun-Ping Chang, 2023. "How does ESG performance promote corporate green innovation?," Economic Change and Restructuring, Springer, vol. 56(4), pages 2889-2913, August.

    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:17:y:2025:i:10:p:4461-:d:1655587. 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.