The Impact of ESG Performance on Firm Value: The Moderating Role of Ownership Structure

Abstract

The purpose of this paper is to investigate the relationship between Environmental, Social and Governance (ESG) performance and firm value of Chinese manufacturing listed companies. The moderating role of ownership structure on the relationship between ESG performance and firm value is also tested. Sino-Securities ESG Rating is adopted in this paper to measure ESG performance and ownership structure is measured in four aspects, which include ownership concentration, equity balances, executive shareholding and institutional investor shareholding. We find that (1) ESG performance is important in improving firm value, (2) executive ownership and institutional ownership positively and significantly affect firm value, while ownership concentration and equity balance have no impact and (3) executive ownership and institutional ownership moderate the link between ESG performance and firm value, whereas the moderating role of ownership concentration and equity balance is not significant. The results of this study contribute to the existing literature on ESG and will aid corporations to enhance firm value through improving ESG performance.

How does corporate ESG performance affect sustainable development: A green innovation perspective

“…Referring to existing studies (Feng et al, 2022;Wu et al, 2022;Li et al, 2023), we measure firms' ESG performance based on the Sino-Securities Index (SSI) ESG Rating System, which currently provides the most widely covered and frequently updated ESG rating data in China. The SSI ESG rating data were derived from the WIND database, and other data were collected from the CSMAR database.…”

Impact of Tax Administration on ESG Performance—A Quasi-Natural Experiment Based on China’s Golden Tax Project III

“…Moreover, the Sino-Securities ESG rating covers all A-share listed companies, covering three primary indicators (environmental, social, and corporate governance), 14 secondary indicators (environmental management systems, green business objectives, green products, external environmental certifications, environmental violations, institutional systems, health and safety, social contributions, quality management, system-building, governance structure, operational activities, operational risks, and external sanctions), 26 tertiary indicators, and over 130 underlying data indicators, resulting in a nine-grade rating from low to high (denoted as C-AAA). The indicators selected by the Sino-Securities ESG rating combine the mainstream international ESG assessment framework, consider Chinese characteristics and specific practical experience, and incorporate the opinions of external market experts, which are reasonable and have been widely used by academics [58,[72][73][74][75]. Therefore, this study draws on Fang and Hu and He and Zhuang [76,77], the C-AAA ratings are assigned as 1-9, and ESG performance is measured by taking the mean of each quarterly rating.…”

Carbon reduction effect of ESG: empirical evidence from listed manufacturing companies in China

“…Regarding the relevance of this instrument, institutional investors such as fund companies can participate in a company's decision-making process and optimize its governance structure, thus positively influencing its overall performance. A study by Wu et al (2022) shows a clear positive relationship between the equity of institutional investors and the ESG performance of firms. This relationship might be due to institutional investors expressing their preference for enhanced ESG performance through direct communication with firms.…”

“…Firstly, this paper is among the first to explore how ESG performance influence corporate carbon reduction behaviors. Although ESG in relation to corporate sustainability and social responsibility has become a hot research topic, most literature mainly focuses on how ESG impacts corporate value, performance, financing costs, risks, and foreign direct investments, among others (El Ghoul et al, 2011;Albuquerque et al, 2019;Wu et al, 2022;Li et al, 2023a;Wang et al, 2023a). The specific impact of ESG performance on corporate carbon reduction behaviors remains largely unexplored.…”