ESG, Dividend Payout, and Ownership in Chinese Enterprises

Abstract

This study examines the impact of Environmental, Social, and Governance (ESG) Score on cash dividends among Chinese A-share listed companies. Based on firm-level data from 2010 to 2019, the findings indicate that companies with higher ESG scores tend to pay higher cash dividends, with this relationship being significant in non-state-owned enterprises but not evident in state-owned enterprises. Furthermore, firms with a higher proportion of mutual fund (MF) ownership are more likely to implement ESG-related dividend policies. To ensure robustness, the study employs Instrumental Variables (IV) and the Propensity Score Matching (PSM) method to address endogeneity concerns, and the results remain consistent. The findings suggest that ESG scores serve as a signaling mechanism for Chinese enterprises, mitigating inefficient investment caused by information asymmetry and highlighting the role of ESG in corporate governance and investor decision-making.