The Impact of State Ownership and Regulatory Changes on ESG Performance

Abstract

In this study, we explore the dynamic relationship between state ownership and ESG performance in Chinese firms, focusing on the impact of the 2018 Corporate Governance Code and the different ESG Category scores. Our longitudinal analysis spans eight years (2015-2022) and includes 193 firms, 63 of which are state-owned. Our findings indicate that, despite generally lower ESG performance by SOEs compared to non-SOEs, the implementation of the 2018 Code ushered in a significant shift. Notably, non-SOEs demonstrated a more pronounced uplift in ESG performance post-regulation. While we identified prevailing positive ESG trends across all firms, the regulation’s specific impact requires further exploration. This study sheds light on the role of regulatory changes in steering ESG performance, offering meaningful insights from the unique Chinese context where state ownership and regulatory shifts are significant determinants.