How Does a Regulatory Minority Shareholder Influence the ESG Performance? A Quasi-Natural Experiment

Abstract

Based on China’s newly established Securities Investor Services Center (CSISC), a minority shareholder protection mechanism, we investigated how the CSISC shareholder influences the ESG performance of listed companies. Using a difference-in-differences analysis for a sample of Chinese listed companies during 2013–2017, we found that the pilot reform of CSISC shareholding has a positive influence on the ESG performance of listed companies. We also found that this effect exists in large companies and in companies in non-high-polluting industries. Besides, analysts’ attention, external auditing quality, institutional shareholding, and highly-developed market intermediary and legal systems can strengthen the effect of CSISC shareholding on corporate ESG performance. Our findings inspire regulators in emerging markets to establish suitable mechanisms to protect minority shareholder rights in the long run.

Shareholders’ Monitoring and Online Disclosures of Minutes of Shareholders’ Meeting

“…Several studies show that the MSWG and CSISC have numerous positive governance effects, such as in (1) improving information disclosure(Lu & Qiu, 2024;Mohd Ariffin et al, 2023); (2) alleviating corporate underinvestment(Huang et al, 2023); (3) enhancing ESG performance(Song et al, 2023); (4) generating higher stock returns(Ameer & Abdul Rahman, 2009;Azizan & Ameer, 2012;Wang et al, 2023); (5) curbing corporate fraud(Zhao et al, 2023); (…”