Against the institutional backdrop of incomplete environmental, social and governance (ESG) disclosure mechanisms and low consistency in ESG ratings in China, media coverage has become a critical channel through which institutional investors obtain corporate sustainability information. Using quarterly panel data of A-share listed firms from 2020 to 2023, this study examines the impact of negative ESG news on institutional ownership. The results show that negative ESG news significantly prompts institutional investors to reduce their holdings, suggesting that, in the Chinese market context, such news is primarily interpreted as a signal of firm-level risk. Further analysis reveals that this effect is driven mainly by conservative institutional investors, while aggressive investors exhibit a weaker response, highlighting substantial heterogeneity in how ESG information is interpreted. From a dimensional perspective, negative news related to social responsibility and corporate governance exerts a stronger influence, whereas environmental-related news has relatively limited effects. By integrating investor behaviour with institutional context, this study provides empirical evidence on the capital market consequences of ESG-related media coverage in an emerging market and offers policy implications for improving ESG disclosure frameworks and promoting rational, responsible investment.
Liu et al. (Sat,) studied this question.
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