How does patient capital shape ESG performance? Evidence from China

Amid growing emphasis on sustainable development, this study examines the role of patient capital in shaping corporate ESG performance. Using Chinese A-share listed firms from 2009 to 2023, we construct an equity-based patient capital measure capturing shareholdings of active long-term institutional investors. The results show that patient capital is significantly positively associated with ESG performance, and the findings remain robust to a range of alternative specifications and endogeneity tests. Mechanism analyses are consistent with patient capital operating through long-term support, strategic guidance and governance enhancement, corresponding to the environmental, social and governance dimensions. Further analyses reveal strong context dependence. The positive association is more pronounced in firms with stronger development foundations, innovation capacity and governance quality, but weaker in firms facing transition constraints or governance distortions. Overall, this study offers empirical evidence and policy implications for using long-term capital to support green transformation and high-quality development.