The Impact of State-Owned Equity Participation on the ESG Performance of Private Enterprises: Evidence from China

A robust ESG performance can confer a multitude of positive economic, social, and environmental benefits upon enterprises, thereby augmenting their long-term competitiveness and capacity for sustainable development. The operational activities of state-owned enterprises are more inclined towards the creation of social value, while state-owned equity participation alters the equity structure of private enterprises. Consequently, state-owned equity participation is posited as a pivotal mechanism for enhancing the ESG performance of private enterprises. Utilizing data from A-share listed private enterprises, this study examines the impact of state-owned equity participation on the ESG performance of these entities. Through the construction of a two-way fixed-effects model, the study substantiates that state-owned equity participation significantly bolsters the performance of private enterprises. The robustness of this conclusion is maintained following the application of a PSM-DID model, instrumental variable approach, and a series of robustness checks. Mechanism analysis reveals that state-owned equity participation enhances ESG performance through the governance effect of state-owned shareholders, by increasing the willingness of private enterprises to fulfill ESG responsibilities and alleviating resource constraints. Heterogeneity analysis indicates that the enhancement in ESG performance is more pronounced among heavily polluting enterprises and those in highly competitive industries, with the effect intensifying as the degree of state-owned equity participation deepens. This paper extends the discourse on the pathways of state-owned equity participation and corroborates its positive influence on the ESG performance of private enterprises.