ESG disclosure uncertainty, “Pseudo patient capital”, and total factor productivity: Evidence from China's heavily polluting industries

Environmental, Social, and Governance (ESG) rating disagreement—cross-agency disclosure uncertainty—has emerged as a salient institutional feature of capital markets in which mandatory ESG disclosure has been institutionalized but rating methodologies remain heterogeneous. This paper examines whether and how such disclosure uncertainty affects firm-level total factor productivity (TFP) in China’s heavily polluting industries. Drawing on an unbalanced panel of Chinese A-share listed firms over 2009–2024 and an ESG disclosure uncertainty (EDU) measure constructed from six rating providers rescaled to a common metric, we document that disclosure uncertainty significantly suppresses firm-level TFP, and that this effect is conditional on the firm’s long-term debt position. At low levels of EDU, long-term debt—conventionally interpreted as patient capital—operates as a productivity stabilizer; as disclosure uncertainty rises, this stabilizing role reverses and long-term debt becomes an amplifier of the productivity penalty. We term this conditional reversal the pseudo–patient capital paradox—a setting in which the disciplinary capacity of long-horizon financing is materially impaired by the surrounding informational environment, so that patience in holding duration is no longer matched by patience in accountability. The paradox is most pronounced in state-owned enterprises (SOEs) and intensifies over the post-2018 ESG institutionalization period. Two mechanisms transmit the effect: tightened capital-market constraints and a bimodal shift in firms’ strategic disclosure behavior. The findings imply that ESG disclosure standardization is a precondition for the effective governance contribution of long-horizon capital.