ESG disclosure, Multiple Large Shareholding (MLS), female directors and firm performance: The case of Chinese manufacturing firms

Background and Purpose: In China, rapid industrialisation and economic growth have heightened the scrutiny of corporate Environmental, Social, and Governance (ESG) practices, particularly in the manufacturing industry, which significantly contributes to environmental degradation and social challenges. This study examines the potential advantages of ESG reporting for Chinese manufacturing firms. Additionally, it assesses the role of female directors in moderating the relationship between ESG practices and reporting towards firm performance, offering insights into the importance of gender diversity on corporate boards in promoting sustainable and responsible business practices. Methodology: This study employs a quantitative approach, utilising publicly available data on ESG reporting and corporate financial performance in Chinese A-share listed manufacturing firms from 2018 to 2022. Financial data and relevant metrics were sourced from the CSMAR and Winds databases. Two regression models were used. The first evaluates the direct relationship between ESG reporting and MLS on corporate financial performance, measured by return on assets (ROA). The second incorporates the moderating effect of female directors on this relationship. Findings: The study found that ESG reporting positively influences the financial performance of Chinese manufacturing listed companies. Improved ESG performance enhances corporate transparency, reduces information asymmetry, and fosters stakeholder trust. The findings also indicate that female directors significantly moderate the relationship between ESG reporting, MLS, and performance. Their presence strengthens ESG initiatives’ impact. Contributions: The study provides insights into the relationship between female directors and ESG practices in Chinese firms. It contributes to understanding ethical decision-making and has implications for developing corporate governance policies in China. Keywords: ESG reporting, firm performance, female directors, gender diversity, corporate governance.