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State shareholding in privately-owned enterprises and their ESG performance: Evidence from China

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  • Wang, Qi
  • Ma, Zhong
  • Wang, Xinyue
  • Wu, Di

Abstract

Utilizing Chinese mixed ownership reform that allows state-owned equity to participate in privately-owned enterprises (POEs), we find that ESG performance of POEs is enhanced with increased state shareholding. Mechanism tests demonstrate that state shareholding alleviates agency problems and financial constraints faced by POEs, thereby leading to enhanced ESG performance. Heterogeneity tests show that the positive impact is more salient among POEs with less aggressive business strategies, as well as those operating in monopolistic and lightly polluting industries. Additionally, by separating three individual components of ESG, we find that the positive impact is salient on social (S) and governance (G) performance.

Suggested Citation

  • Wang, Qi & Ma, Zhong & Wang, Xinyue & Wu, Di, 2024. "State shareholding in privately-owned enterprises and their ESG performance: Evidence from China," Finance Research Letters, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:finlet:v:60:y:2024:i:c:s1544612323012631
    DOI: 10.1016/j.frl.2023.104891
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    Cited by:

    1. Wang, Qi & Ma, Zhong & Zhao, Jinying & Shu, Guang, 2024. "State shareholding in privately-owned firms and greenwashing: Evidence from China," Finance Research Letters, Elsevier, vol. 62(PA).
    2. Chen, Chaofan & Li, Wen-Bo & Zhang, Heng, 2024. "How do property rights affect corporate ESG performance? The moderating effect of green innovation efficiency," Finance Research Letters, Elsevier, vol. 64(C).

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    More about this item

    Keywords

    State shareholding; ESG performance; Privately-owned enterprises;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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