State ownership and the value of sustainability: Evidence from China

Zhenshu Wu, Rachel Pownall, Yi-Cheng Shih and Chendi Zhang

International Review of Financial Analysis, 2025, vol. 102, issue C

Abstract: This study examines the impact of state ownership on the performance of environmental and social (ES) stocks in China's stock markets. Using the COVID-19 market crash as an exogenous shock, we find that ES positively impacts stock returns for non-state-owned enterprises (non-SOEs); however, this effect is absent for state-owned enterprises (SOEs). The ES effect in non-SOEs concentrates on firms with strong employee relations and is more pronounced in those with high institutional ownership, financial constraints, and bankruptcy risk. In the long term, we also find that ES performance boosts stock returns for non-SOEs, but not for SOEs. These results suggest that ES investments by SOEs may be driven by non-economic motivations.

Keywords: State ownership; Environmental & Social performance; COVID-19 (search for similar items in EconPapers)
JEL-codes: G12 G32 M14 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:102:y:2025:i:c:s1057521925002297

DOI: 10.1016/j.irfa.2025.104142

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