The Impact of Ownership Concentration on ESG Performance of Private Enterprises

Abstract

Against the background of China’s high-quality economic development and deepening green transition, environmental, social and governance (ESG) practices have become a core component of firms’ sustainable development and modern governance. Private enterprises are key players in the market economy. Their ESG performance affects not only long-term corporate value creation, but also the outcomes of macro-level green economic transformation. This study selects Chinese A-share private listed firms over the period 2021-2024 to explore the internal governance mechanisms driving ESG outcomes. Drawing on principal-agent theory and stakeholder theory, we empirically examine how ownership concentration influences the ESG performance of private enterprises. The results indicate a significantly positive relationship between ownership concentration and overall ESG performance. A moderately concentrated ownership structure improves monitoring by large shareholders and mitigates managerial myopia. It encourages firms to respond to demands from diverse stakeholders and therefore enhances their performance in environmental protection, social responsibility and corporate governance. From an ownership-governance perspective, this paper extends the theoretical boundaries of ESG-related research on private enterprises. It provides micro-level empirical evidence for private firms to adjust ownership structures, strengthen ESG systems and achieve sustainable growth. It also yields practical implications for capital-market authorities to improve green governance mechanisms.