Public Fund Holdings Improve Corporate ESG Performance—Taking the Chinese A-Share Market as an Example

ESG performance is an important lever for promoting sustainable development of enterprises. To investigate the impact of fund holdings on corporate ESG performance, this paper uses the dynamic panel data GMM method to conduct empirical analysis based on China's A-share listing data from 2009 to 2024. The results indicate that public fund holdings can improve corporate ESG performance. The analysis of the impact mechanism shows that the improvement effect of public fund holdings on corporate ESG performance is mainly achieved through four channels: increasing information transparency, reducing earnings management, increasing corporate innovation investment, and reducing corporate debt financing costs. Heterogeneity analysis shows that the improvement effect of public fund holdings on corporate ESG performance is more significant in high-tech enterprises, heavily polluting industry enterprises, and enterprises with high analyst attention. Further analysis reveals that different types of institutional holdings have a positive impact on corporate ESG performance. Public fund holdings not only promote corporate ESG performance, but also enhance corporate efficiency and reduce operational risks. The research conclusion provides empirical evidence from fund investors on the impact of public fund holdings on corporate sustainable development.