Common Ownership and ESG Performance : Evidence from China

Common Ownership become more and more common today, and scholars have gradually deepened their research on how common institutional investors affect corporate behavior. Under the background that concept of ESG investment has gradually become mainstream, we deeply analyzed the impact of common ownership on ESG performance. We found that common ownership plays a synergy effect and promotes ESG performance. The conclusion is still valid after using two-step estimation,2SLS, PSM and other test methods. The mechanism test found that common ownership reduced information asymmetry and tax avoidance. Not only that, the larger the network of common ownership, the better synergistic effect. We also found that common ownership can achieve synergy effect and improve ESG performance by increasing executive compensation incentives and reducing corporate debt costs