State-Owned Capital Participation and Corporate Environmental, Social, and Governance Performance: Evidence from Chinese Private Firms

Private enterprises are one of the important engines of economic development, and the “reverse mixed-ownership reform” of state-owned capital participating in private enterprises is of great significance for improving the market-oriented allocation of factor resources and supporting the high-quality development of private enterprises. This study employs the propensity score matching–difference-in-differences (PSM-DID) methodology to examine the influence of state-owned capital participation (SOCP) on the environmental, social, and governance (ESG) performance of private listed companies in China from 2011 to 2021. The results reveal a significant positive impact of SOCP on the ESG performance of private enterprises, which remains valid after a series of robustness tests. Mechanism analysis demonstrates that mitigating information asymmetry exerts a completely mediating effect in the process of SOCP to improve the ESG performance of private firms. Moreover, heterogeneity analysis further indicates that the effect of SOCP on improving ESG performance is more prominent in enterprises with large scale, low agency costs, and high media attention; by dividing the three single components of ESG, the positive impact is significant on environmental (E) and social (S) performance. This study not only contributes to a deeper understanding of the micro-level impact of SOCP but also provides valuable insights for developing countries seeking to improve enterprises’ ESG performance to achieve sustainable development.