Sustainability performance as a determinant of ownership structure : A quantitative study on ESG as a benchmark of investor preferences

This thesis is investigating how ownership structure of a company is affected by its sustainability performance. The dissertation topic was formed during a literature screening which exposed a clear research gap which we found interesting. The goal of this thesis is to create a better understanding of how ESG can shape the ownership structure of a company, and what investor types might value and have specific preference for ESG. Hopefully, this thesis can provide companies information on how their sustainability performance can affect their ability to attract capital and specific investors. Sustainability performance data is gathered and measured through Refinitiv Eikon’s ESG score and its individual pillars (Environmental, Social and Governance), along with the dependent variable ownership structure which has also been collected through Refinitiv Eikon. Ownership structure has been divided and categorized into five distinct investor types: institutional, individual, corporate-managerial, governmental and family. This thesis features the characteristics of a deductive, quantitative and cross-sectional study. In total 144 mid to large-cap firms from Sweden, Finland, Norway and Denmark were chosen to represent our sample population. These specific countries were chosen as they are at the top of Robeco’s ESG rating for countries. Our chosen time period was the year with the latest available data, 2022. After conducting a linear regression analysis, the results offered a couple of interesting significant results. When it comes to ESG score, a significant positive relationship was found for institutional investors indicating a preference for ESG stocks whereas corporate-managerial investors had a negative relation to the ESG score. This is in line with previous research and the shareholder and stakeholder theory. Furthermore, the environmental pillar was the most prioritized pillar of the three. This is partly consistent with previous literature and the stakeholder theory. All investor types except individual investors had a significant relationship with at least one of the ESG pillars. As for the social pillar, the only ownership structure displaying a positive relationship is the institutional ownership structure. Based on the results and previous research, it is obvious that further research is necessary to create a better consensus of how the ownership structure is affected by sustainability performance. Research is also in need of an explanation of a causal relationship. Therefore, a couple of suggestions for further research have been presented at the end of this thesis.