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Institutional Shareholders and Firm ESG Performance: Evidence from China

Author

Listed:
  • Fang Jia

    (School of Management, Wuhan Polytechnic University, 36 Huanhu Middle Road, Dongxihu District, Wuhan 430048, China)

  • Yanyin Li

    (School of Management, Wuhan Polytechnic University, 36 Huanhu Middle Road, Dongxihu District, Wuhan 430048, China)

  • Lihong Cao

    (Business School, Hunan University, Lushan South Road 2, Changsha 410082, China)

  • Lintong Hu

    (School of Management, Wuhan Polytechnic University, 36 Huanhu Middle Road, Dongxihu District, Wuhan 430048, China)

  • Beibei Xu

    (School of Management, Wuhan Polytechnic University, 36 Huanhu Middle Road, Dongxihu District, Wuhan 430048, China)

Abstract

It is a noteworthy phenomenon that institutional investors care more about the ESG performance of the firms in their portfolios in China. Exploring the role of institutional shareholders in firms’ ESG performance is vital for corporate sustainable growth. Using a sample of publicly listed firms from 2013 to 2020 in China, through the OLS model, order logistic model, and tobit model, we found that firms with higher institutional ownership had better ESG performance, especially in the environmental (E) aspect. The positive effect of institutional investors on ESG performance is more pronounced in SOE firms, and firms in low pollution industries. Furthermore, mechanism tests suggest that institutional shareholders can incentivize firms to engage in ESG by affecting management change and board voting.

Suggested Citation

  • Fang Jia & Yanyin Li & Lihong Cao & Lintong Hu & Beibei Xu, 2022. "Institutional Shareholders and Firm ESG Performance: Evidence from China," Sustainability, MDPI, vol. 14(22), pages 1-17, November.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:22:p:14674-:d:966121
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    References listed on IDEAS

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    Cited by:

    1. Zhengyong Zhang & Jiayi You, 2024. "Does firms' ESG information disclosure have contagion effect? Evidence from China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3274-3296, July.
    2. Kankan Wen & Andrew Agyemang & Noha Alessa & Inusah Sulemana & Abednego Osei, 2023. "The Moderating Role of Ownership Concentration on Financing Decisions and Firm’s Sustainability: Evidence from China," Sustainability, MDPI, vol. 15(18), pages 1-14, September.
    3. Yuxin Ning & Yihan Zhang, 2023. "Does Digital Finance Improve Corporate ESG Performance? An Intermediary Role Based on Financing Constraints," Sustainability, MDPI, vol. 15(13), pages 1-17, July.
    4. Defang Ma & Liangwei Li & Yuxi Song & Mengkai Wang & Qiaowen Han, 2023. "Corporate Sustainability: The Impact of Environmental, Social, and Governance Performance on Corporate Development and Innovation," Sustainability, MDPI, vol. 15(19), pages 1-16, September.
    5. Yiqun Duan & Fan Yang & Lin Xiong, 2023. "Environmental, Social, and Governance (ESG) Performance and Firm Value: Evidence from Chinese Manufacturing Firms," Sustainability, MDPI, vol. 15(17), pages 1-24, August.
    6. 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.

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