Empowering sustainability assurance: how managerial engagement transforms institutional pressure into performance

Yue, S. ORCID: https://orcid.org/0000-0001-8783-4187, Manokaran, K. R. ORCID: https://orcid.org/0000-0002-0811-5211, Li, N. ORCID: https://orcid.org/0009-0008-8387-3638 and Abdullahi, O. A. (2025) Empowering sustainability assurance: how managerial engagement transforms institutional pressure into performance. In: Khatib, S. F. B. and Abbas, A. F. (eds.) Navigating Trust in Sustainability Reporting and Assurance. IGI Global, pp. 63-106. ISBN 9798337301174 doi: 10.4018/979-8-3373-0117-4.ch003

Abstract/Summary

This chapter explores how institutional investors and managerial engagement influence sustainability assurance, using ESG ratings as a proxy. Based on stakeholder and agency theories, it examines the effects of long-term and short-term investors on sustainability practices and how managerial engagement, measured by managerial shareholdings, moderates these impacts. Data from China's A-share market (2013-2022) with fixed-effects panel analysis was utilized, with robustness checks using Bloomberg ESG ratings confirming the findings. Heterogeneity analysis by firm characteristics and pollution intensity further supports the hypotheses. Results highlight managerial engagement's role in aligning corporate practices with investor expectations, offering insights to enhance sustainability assurance.