The Impact of Firms’ ESG Performance on the Holding Decisions of Institutional Investors: Evidence from Chinese Publicly Listed Companies

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Provides updated evidence on the ESG-investment nexus in China, with methodological insights for studying emerging markets.

🏢実務担当者:Corporate sustainability teams should note that ESG performance may not yet drive institutional investment in China, but the trend could change with evolving disclosure practices.

🏛政策担当者:Policymakers may consider strengthening ESG disclosure requirements to enhance the role of ESG factors in capital allocation.

With the global rise in sustainable investment concepts, environmental, social, and governance (ESG) factors have increasingly become important criteria influencing investment decisions. Although institutional investors are paying greater attention to corporate ESG performance, limited evidence exists regarding its impact within the Chinese A-share market. Using panel data from Chinese listed firms during the period 2010–2023, this study employs fixed-effects models with clustered standard errors as the baseline estimation method. To improve the robustness of the findings, Tobit regression, Logit regression, lagged-variable models, heterogeneity analysis, and Hausman tests are further conducted. The empirical findings indicate that the overall ESG score and the individual environmental (E), social (S), and governance (G) dimensions do not exhibit statistically significant effects on institutional ownership in the baseline fixed-effects regressions. The results suggest that ESG performance has not yet become a dominant determinant of institutional investment decisions in China’s capital market. However, the robustness tests based on Tobit and Logit models provide limited evidence that ESG performance may still influence institutional investor behavior under alternative empirical specifications. Furthermore, the heterogeneity analysis reveals that the relationship between ESG dimensions and institutional ownership differs across environmentally related and non-environmentally related firms, although the effects are generally weak and statistically limited. The study contributes to the ESG and institutional investment literature in three important ways. First, it provides updated evidence from the Chinese A-share market over the 2010–2023 period, reflecting the evolving stage of ESG development in emerging economies. Second, it comparatively examines the differentiated roles of environmental, social, and governance dimensions rather than relying solely on aggregated ESG indicators. Third, it highlights the limited and transitional nature of ESG integration among institutional investors in China, where traditional financial indicators continue to play a more important role in investment decisions. The findings provide important implications for policymakers, listed firms, and institutional investors seeking to promote sustainable finance development and improve the effectiveness of ESG disclosure practices in emerging markets.

• semanticscholar https://www.mdpi.com/1911-8074/19/7/458/pdf?version=1782218492first seen 2026-07-18 08:14:44