Administrative Monopoly Regulation, Greenwashing and ESG Performance: Evidence from China Fair Competition Review System
Year: 2026
Type: preprint
Abstract: This study examines whether and how administrative monopoly regulation affects corporate ESG performance. We exploit the implementation of China’s Fair Competition Review System (FCRS) as a quasi-natural experiment that strengthens competition policy and curbs administrative monopolies. Using a difference-in-differences design, we find that the FCRS significantly improves firms’ ESG performance, reflected in higher ESG ratings and scores and a reduction in ESG greenwashing. Mechanism analyses indicate that this effect operates through a competition-driven incentive channel: by enhancing market competition and promoting competitive neutrality, administrative monopoly regulation increases firms’ incentives to engage in substantive ESG activities. We further show that the effect is primarily concentrated in the environmental and social dimensions. Cross-sectional analyses reveal that the effect is stronger in settings with higher levels of external attention, including from banks, investors, the public, and government stakeholders, and is more pronounced among state-owned enterprises, firms in monopolistic industries, and regions with stronger policy enforcement. Finally, we document that the ESG improvements induced by administrative monopoly regulation have real economic consequences, including alleviating financing constraints and improving both product market and capital market performance. Overall, our findings highlight the role of competition policy as an important institutional driver of corporate ESG outcomes and provide new evidence on how market-oriented reforms can promote substantive sustainability engagement.
Source: Research Square
Authors: Hui Xie, Feifei Han, Daoping Jiang, Qi Dong
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7204887376