Policy Implementation and Sustainable Governance in Chinese SOEs: A Study of Mixed-Ownership Reform and ESG Rating Divergence

Abstract

Enterprises fulfilling ESG responsibilities represent a strategic choice to achieve sustainable and high-quality development. Using the sample of A-share state-owned listed companies in China from 2015 to 2022, this study investigates the association of mixed ownership reform (MOR) of state-owned enterprises (SOEs) with ESG rating divergence. The findings reveal that MOR significantly exacerbates ESG rating divergence, particularly in firms with lower equity concentration, smaller scale, those in heavily polluting industries, and those with higher ESG disclosure levels. Robustness checks, including utilizing alternative measurement approaches, lagging sample periods, the propensity score matching (PSM) method, and the difference-in-differences (DID) model, address potential endogeneity issues and confirm the validity of these results. Further analysis demonstrates that MOR increases ESG rating divergence by reducing information transparency and cutting human capital investment, while enhancing ESG disclosure quality mitigates this divergence. These insights advance understanding of the tensions between governance reforms and sustainability metrics in transitional economies, providing a perspective for sustainable corporate governance of enterprises in the background of policy reform.