Do state-owned enterprises prefer capital from private enterprises with better ESG performance? Evidence from China's mixed ownership reforms

Abstract

This study investigates whether ESG performance is a criterion for state-owned enterprises (SOEs) to introduce capital from private enterprises in mixed ownership reforms. Using a sample of A-share private listed companies in China and manually collecting the data of the Chinese private listed companies with ownership participation in SOEs during 2010–2020, we find that private enterprises’ ESG performance is positively associated with the possibility and number of their ownership participation in SOEs, which remains consistent after conducting several robustness tests. Moreover, the relationship between private enterprises’ ESG performance and their ownership participation in SOEs is more pronounced for firms with high media coverage and firms without political connections.