Does Ownership Structure Influence the Nexus Between ESG Performance and Firm Risk-Taking? Evidence From Chinese Firms

The Environmental, Social, and Governance (ESG) paradigm has gained increasing attention as firms face pressure to adopt socially and environmentally responsible policies. Given its importance, this study addresses knowledge gaps by investigating whether ESG performance affects firm risk-taking. Further, it examines how ownership structure influences the relationship between ESG performance and firm risk-taking. A rigorous methodology comprising four statistical techniques and several measures of the variables was employed to ensure the robustness of the results. The findings suggest that ESG performance positively and significantly influences firm risk-taking. Moreover, we report novel findings that institutional, state, and foreign ownership significantly moderate the relationship between ESG performance and firm risk-taking. Further heterogeneity analyses revealed that ESG performance positively and significantly influences firm risk-taking in both environmentally sensitive and non-sensitive industries.