Financial sanctions and environmental, social, and governance (ESG) performance: a comparative study of ownership responses in the Chinese context

This study undertakes a comprehensive examination of the relationships between strategic investors, financial sanctions, and ESG performance in Chinese non-financial firms from 2011 to 2022. The study demonstrates a positive relationship between ESG performance and foreign and government ownership, while indicating a negative impact from family ownership, using data from the ASSET4 and the Global Sanction Database (GSDB). Financial sanctions serve as a moderating factor, demonstrating that foreign and family ownership are associated with an higher level of ESG involvement during sanctions. Conversely, government ownership is connected to a decrease in ESG performance. Our results contribute to several fields, including ownership literature, agency theory, and sanctions literature. Additionally, they have practical implications for multiple groups of stakeholders, such as investors, managers, and policymakers.