Can ownership structure improve environmental performance in Chinese manufacturing firms? the moderating effect of financial performance

There is a growing debate on how should Chinese manufacturing firms improve their environmental performance (EP). In this paper, we analyze the impact of ownership structure (OS, including ownership property, SOP; ownership concentration, H5; shareholding ratio of the largest and second shareholders, FS; total proportion of stated-owned shares owned by top 10 shareholders, TOP10; proportion of independent directors accounting for all board members, ID) on EP with the consideration of the moderating effect of financial performance measured by net profit rate (NPR) through surveying 1605 firm-year observations. The findings present that the overall EP of Chinese manufacturing firms is relatively low (The average level is only 25.94% of the ideal maximum). Both SOP and H5 significantly improve EP (marginal effects within 8.20%~8.76% and 4.37%~4.44%, respectively), while the impacts of FS and TOP10 are both not significantly positive. Additionally, H5 significantly improves EP (8.90%~9.08%) when TOP10 is higher, and SOP significantly improves EP (10.01%~10.86%) when TOP10 is lower. Further, NPR negatively moderates the impact of FS on EP for the full sample and only positively moderates the impact of higher TOP10 on EP. However, the weak moderating effect of NPR also releases a positive signal fhat the level of EP is not dominated by financial performance. Accordingly, corporate EP may keep rising based on its prior trend instead of a major volatility in the coming period.