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Examining institutional investor preferences: The influence of ESG ratings on stock holding in China's stock market

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  • Zou, Jin
  • Zhong, Xiaoying
  • Gong, Chi
  • Lu, Xiaoye

Abstract

Amidst the global rise in ESG investing, this study scrutinizes China's institutional investors' preference for high-ESG stocks. Utilizing A-share data from 2015 to 2022, our analysis reveals a strong preference for high-ESG stocks, driven by their potential to reduce operational risks, enhance profitability, and reputation. This preference is further amplified by significant analyst report coverage, yet moderated by disparities in ESG ratings. We also observe a distinct trend among independent investors, who favor high-ESG firms, particularly in non-state-owned sectors and in smaller companies within high-pollution industries. The findings suggest that guiding institutional investments towards ESG can steer China’s capital market towards more environmentally friendly businesses, thereby promoting sustainable economic development.

Suggested Citation

  • Zou, Jin & Zhong, Xiaoying & Gong, Chi & Lu, Xiaoye, 2025. "Examining institutional investor preferences: The influence of ESG ratings on stock holding in China's stock market," Research in International Business and Finance, Elsevier, vol. 73(PA).
    • Handle: RePEc:eee:riibaf:v:73:y:2025:i:pa:s0275531924004021
    DOI: 10.1016/j.ribaf.2024.102609
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    References listed on IDEAS

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