Date of Award

3-12-2026

Thesis Type

Masters

Document Type

Dissertation

Divisions

Faculty of Business and Economics

Department

Department of Accounting

Institution

Universiti Malaya

Abstract

This thesis examines the relationship between Environmental, Social, and Governance (ESG) performance and financing constraints, placing particular emphasis on the moderating role of institutional investors in listed Chinese firms. Drawing on information asymmetry theory, the study argues that ESG performance can reduce financing constrains by narrowing informational discrepancies between firms and external capital providers. While prior research has largely focused on the direct effects of ESG on financing, limited attention has been given to the ways in which institutional investors who are both major users of ESG information and active participants in corporate governance shape this relationship. China’s capital market provides a unique setting for this investigation. ESG disclosure is primarily state-driven, the financial system remains comparatively immature, and institutional investors frequently exhibit short investment horizons. These characteristics influence how ESG information is interpreted and the extent to which it can reduce information asymmetry. Against this backdrop, the study explores whether ESG performance effectively alleviates financing constraints and how institutional investor behaviour moderates this effect. Drawing on panel data from Chinese A-share listed firms between 2012 and 2022, the study develops a framework capturing four dimensions of institutional investor behaviour, specifically corporate site visits, information competition, shareholding, and peer influence. Fixed-effects regression models are applied to evaluate whether these behaviors condition the relationship between ESG performance and financing constraints. Findings reveal that ESG performance is negatively associated with financing constraints, suggesting that firms with stronger ESG profiles face fewer barriers in accessing external capital. Moreover, institutional investor behaviour significantly strengthens this mitigating effect. Specifically, site visits and information competition enhance the credibility and efficiency of ESG signals, reducing uncertainty for capital providers. Meanwhile, shareholding and peer influence broaden their interpretation and application at both the firm and industry levels. By incorporating institutional investor behavior into the analysis, this study enriches the ESG and corporate finance literature and offers practical insights for policymakers aiming to improve ESG disclosure effectiveness, as well as for firms seeking to attract capital in emerging markets through sustainable development strategies.

Initial

khm

Additional Information

Dissertation (M.A.) – Faculty of Business and Economics, Universiti Malaya, 2026.

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