State ownership and the value of sustainability: Evidence from China

Zhenshu Wu*, Rachel Pownall, Yi-Cheng Shih, Chendi Zhang

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

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Abstract

This study examines the impact of state ownership on the performance of environmental and social (ES) stocks in China's stock markets. Using the COVID-19 market crash as an exogenous shock, we find that ES positively impacts stock returns for non-state-owned enterprises (non-SOEs); however, this effect is absent for state-owned enterprises (SOEs). The ES effect in non-SOEs concentrates on firms with strong employee relations and is more pronounced in those with high institutional ownership, financial constraints, and bankruptcy risk. In the long term, we also find that ES performance boosts stock returns for non-SOEs, but not for SOEs. These results suggest that ES investments by SOEs may be driven by non-economic motivations.
Original languageEnglish
Article number104142
Number of pages15
JournalInternational Review of Financial Analysis
Volume102
DOIs
Publication statusPublished - 1 Jun 2025

JEL classifications

  • g12 - "Asset Pricing; Trading volume; Bond Interest Rates"
  • g32 - "Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill"
  • m14 - "Corporate Culture; Social Responsibility"

Keywords

  • CORPORATE SOCIAL-RESPONSIBILITY
  • COVID-19
  • Environmental & Social performance
  • INVESTMENT
  • PERFORMANCE
  • State ownership

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