The effect of ownership structure on ESG disclosure in China

Effective ESG disclosure is becoming increasingly important in corporate governance as stakeholders demand greater corporate sustainability. As the world's second-largest economy and a major emerging market, China exhibits unique state-owned attributes and concentrated ownership in corporate governance, providing a distinctive research perspective for studying the relationship between ownership structure and ESG disclosure. Recently, China's mixed ownership reform has brought new challenges to corporate governance, and provided an important opportunity to promote ESG disclosure. Therefore, this study examines how ownership concentration, and equity checks and balances affect ESG disclosure in China. Using a fixed-effects model, we conduct an empirical analysis of data from 1,008 companies listed on the Shanghai and Shenzhen Stock Exchanges between 2017 and 2022, evaluating the relationship between ownership structure and ESG disclosure levels. The results indicate that higher ownership concentration has a significant negative impact on ESG disclosure, as controlling shareholders may prioritize short-term financial returns at the expense of broader ESG goals. In contrast, equity checks and balances have a significant positive impact on ESG disclosure, indicating greater counterbalance power among shareholders can promote higher transparency and accountability in ESG reporting. This study contributes to the literature by providing empirical evidence on how ownership structures affect ESG disclosure in the Chinese context, offering policy insights for improving corporate governance practices. Policymakers and corporate practitioners can draw on these findings to promote stronger governance frameworks that enhance ESG transparency and corporate sustainability. Future research can further explore the global dynamics of ESG disclosure under different ownership structures by comparing emerging markets (concentrated ownership) with developed markets (dispersed ownership), to reveal the impact of corporate governance models on ESG transparency in different market contexts.

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