Ownership structure, financing constraints and environmental, social and governance performance in China

Abstract

This study examines the relationship between ownership structure and corporate environmental, social and governance (ESG) performance and investigates the moderating role of financing constraints. Based on a sample of 23,801 firm-year observations from Chinese A-share listed companies between 2019 and 2024, fixed-effects panel regressions are employed, with standard errors clustered at the firm level. The findings The findings are as follows: 1) state ownership, managerial ownership, and ownership concentration are all significantly and positively associated with corporate ESG performance; 2) financing constraints negatively moderate the relationships of state ownership and managerial ownership with ESG performance, while positively moderating the relationship between ownership concentration and ESG performance; and 3) supplementary tests indicate that, although both state ownership and managerial ownership exhibit an inverted U-shaped relationship with ESG performance, over 85 percent of the sample lies below the turning point, suggesting that the negative effect is not prevalent. Grounded in agency theory, this study contributes to the literature on corporate ESG performance and provides empirical evidence to inform the optimization of ownership structures among Chinese listed companies in the context of capital market imperfections.