Institutional Shareholders and Firm ESG Performance: Evidence from China

Fang Jia, Yanyin Li, Lihong Cao (), Lintong Hu and Beibei Xu
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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

Sustainability, 2022, vol. 14, issue 22, 1-17

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.

Keywords: ESG; institutional ownership; responsible investment (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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