AN EMPIRICAL STUDY OF ESG PERFORMANCE AND COMPANY VALUE IN CHINA’S LISTED COMPANIES - THE MEDIATING EFFECT OF INSTITUTIONAL INVESTORS’ SHAREHOLDINGS

Abstract

The objective of this study was to identify the relationship on ESG performance and company value, and the mediating mechanism of institutional investors' shareholdings, and propose recommendations.The relationship between ESG and institutional investors is studied from various perspectives, with some suggesting ESG has a value-creation function. However, ESG practices are resource-consuming, requiring companies to make reasonable trade-offs between socially beneficial and financial benefits (Luo et al., 2023). However, there is still much to investigate and learn about ESG because it is a recent development in China, mainly studied in developed countries.We analyzed data of 3,100 China-listed companies from 2015 to 2022, using institutional investors' shareholding as a mediating variable. Regarding the research results in SSCI and Scopus, selecting the authoritative metrics to collate ESG data via Python and using STATA to analyze the results. Based on collaboration with Malaysian academics, also exploring the cooperation between countries.A positive correlation existed between the company value and ESG performance of listed companies, indicating ESG has a value-creating effect. Investor shareholdings have a mediating effect, and good ESG performance helps increase investor shareholdings, enhancing the company's value. Investors have ESG investment preferences, but place more emphasis on the intrinsic company value, prefer secondary and tertiary industries and non-state listed companies.We suggest future directions and highlight the contributions to the mediating effect of investors' shareholdings on ESG and company value.

Keywords: Listed companies; ESG; Company value; Institutional investors; Mediating effect; Empirical study