Author(s)

GuanNan Liu

Affiliation(s)

School of International Economics, China Foreign Affairs University, Beijing 102206, China.

Corresponding Author

GuanNan Liu

ABSTRACT

The ESG ratings issued by ESG rating agencies have emerged as a vital reference for investors and creditors when making decisions. However, the differences in ESG ratings provided by various agencies not only bring noise into the capital market but also affect the development of patient capital. This study takes Chinese A-share listed companies from 2015 to 2022 as the sample and uses a fixed-effects model to empirically examine the influence of ESG rating divergence on patient capital. The findings show that ESG rating divergence leads to a reduction in patient capital. Further analysis indicates that ESG rating divergence intensifies the degree of information asymmetry in the market and lowers stock liquidity, which in turn reduces patient capital. This impact is more significant in non-state-owned enterprises and companies with high-quality ESG information disclosure. This research offers empirical evidence for the standardization of the ESG rating system construction, the enhancement of patient capital, and the advancement of high-quality economic development.

KEYWORDS

Patient capital; ESG rating divergence; Market information asymmetry; Stock liquidity

CITE THIS PAPER

GuanNan Liu. The impact of patient capital on ESG rating divergence. World Journal of Management Science. 2025, 3(2): 17-22. DOI: https://doi.org/10.61784/wms3064.

REFERENCES

[1] Li Sanxi, Liu Xi, Sun Hailin. Promoting the Development of New Quality Productivity with Patient Capital: Characteristics, Significance, Current Situation, Problems, and Pathways of Cultivation. Financial and Economic Issues Research, 2024, 10: 14-28.

[2] Ivashina V, Lerner J. Patient capital:the challenges and promises of long-term investing. Princeton University Press, 2019.

[3] Berg F, Kolbel J F, Rigobon R. Aggregate confusion: The divergence of ESG ratings. Review of Finance, 2022, 26(6): 1315-1344.

[4] Kotsantonis S, Serafeim G. Four things no one will tell you about ESG data. Journal of Applied Corporate Finance, 2019, 31(2): 50-58.

[5] Cai Y, Pan C H, Statman M. Why do countries matter so much in corporate social performance? Journal of Corporate Finance, 2016, 41: 591-609.

[6] Jacobs B, Kenneth N Levy. The Challenge of Disparities in ESG Ratings. The Journal of Impact and ESG Investing, 2022.

[7] Ermokhin I, Levashenko A, Burhanova Y. The Problem of Divergence of ESG Ratings Awarded by Persons Providing Services for the Assessment of Sustainable Development. The Main Trends in the Field of Legislative Regulation of the ESG rating Institute in Russia and in the World. International Organisations Research Journal, 2023, 18(3): 186-204.

[8] Chen Hongtao, Yin Haifeng, Zhang Tianshu, et al. Does ESG Rating Divergence Affect the Pricing Efficiency of the Capital Market? A Study Based on the Synchronicity of Stock Prices of Listed Companies. Financial Research, 2024(01): 1-17 

[9] Liu Xiangqiang, Yang Qingqing, Hu Jun. The Relationship between ESG Rating Divergence and Stock Price Synchronicity. Chinese Soft Science, 2023(08):108-120

[10] Roll R. A Simple Implicit Measure of the Effective Bid-Ask Spread in an Efficient Market. Journal of Finance, 1984, 39: 1127-1139.

[11] He Taiming, Li Yixi, Wang Wei, et al. Do ESG rating discrepancies enhance the voluntary disclosure of information by listed companies? Accounting and Economic Research, 2023, 37(03): 54-70.