Effects of ESG on the relationship between ownership concentration and cash holdings

This paper examined the impact of ownership concentration on cash-holding levels, including 4832 Chinese-listed companies. This study employed the Fixed Effects Model and the Generalized Method of Moments for quantitative analysis. This study shows a positive relationship between ownership concentration and cash holdings. Furthermore, ESG can mitigate the direct correlation between ownership concentration and corporate cash holdings. Finally, the impact described above is particularly noticeable for non-state-owned enterprises. In summary, the empirical findings offer a new analytical perspective on the cash-holding decisions of corporations in the Chinese capital market. Furthermore, this study illustrates the importance of ESG in corporate development to mitigate ownership concentration and excess cash holdings. As a result, the findings show that non-financial reporting, such as ESG disclosure, can reduce agency issues, making more accurate assessments of enterprise performance.