Domestic vs. Foreign Institutional Investors: Who Improves ESG and Value of Chinese Companies?

Jae Wook Yoo and Yu Jin Chang ()
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Jae Wook Yoo: College of Business Administration, Konkuk University, Seoul 05029, Republic of Korea
Yu Jin Chang: Department of Global Business Administration, Anyang University, Anyang 14028, Republic of Korea

Sustainability, 2024, vol. 16, issue 18, 1-16

Abstract: Recent years have seen the influence of both institutional investors and corporate social responsibility strengthen in the Chinese capital market. However, research on the impact of these market changes on corporate activities and values has been insufficient. To address this gap, this study analyzes the impact of foreign and domestic institutional investors who invest in Chinese A-share listed companies on corporate value through environmental, social, and governance (ESG) policies. The results of the analysis are as follows: First, the shareholding of both foreign institutional investors (FIIs) and domestic institutional investors (DIIs) enhances corporate value. Second, the shareholding of FIIs strengthens the company’s ESG, while that of DIIs does not significantly affect it. Third, ESG has a positive impact on corporate value. Fourth, ESG partially mediates the positive relationship between the shareholding of FIIs and corporate value. The research findings provide academic implications for the causal relationship between corporate governance, sustainable management, and performance, as well as practical implications for the development of the Chinese capital market and corporate sustainability.

Keywords: institutional investor; foreign institutional investor; domestic institutional investor; environmental; social; and governance; corporate value (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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