ESG as a Safeguard: Reducing Executive Opportunistic Behavior in China's A‐Share Market

ABSTRACT Based on panel data from A‐share listed companies on the Shanghai and Shenzhen stock exchanges from 2009 to 2022, this study examines the impact of corporate ESG performance on executive opportunistic stock sales. The findings reveal that improvements in ESG performance effectively curb such sales, primarily through two mechanisms: reducing executives' self‐serving behavior and mitigating stock price volatility risks. Furthermore, institutional investor ownership exerts a negative moderating effect on this relationship. Additional analysis indicates that the inhibitory effect of ESG performance on executive opportunistic stock sales is more pronounced in private enterprises, firms with weak internal controls, and those characterized by higher levels of information asymmetry. This study provides intrinsic motivation and external impetus for companies to proactively adopt ESG principles, while offering theoretical and practical insights for policymakers to regulate speculative executive behavior and safeguard the stability of capital markets.