The Effect of Corporate Sustainability Performance on Information Asymmetry: The Moderating Role of Ownership Concentration in Companies Listed on the Tehran Stock Exchange

Salar Ranjbar

Authors

Salar Ranjbar MA, Department of Financial Management, CT.C., Islamic Azad University, Tehran, Iran https://orcid.org/0009-0004-8617-5887

Keywords:

environmental, social, and governance performance, information asymmetry, ownership concentration, disclosure theory

Abstract

The present study examines the effect of environmental, social, and governance (ESG) performance on information asymmetry and analyzes the moderating role of ownership concentration in this relationship. The statistical sample consists of 111 companies listed on the Tehran Stock Exchange over the 2015–2024 period, yielding a total of 1,110 firm-year observations. Information asymmetry was measured using the bid–ask spread, while ESG performance was measured using a composite sustainability score. The data were analyzed using fixed-effects panel-data regression models with standard errors corrected for heteroskedasticity and autocorrelation. The findings showed that ESG performance has a negative and highly significant effect on information asymmetry (coefficient = −0.032, t = −5.802, p < .001), such that a one-unit increase in the ESG score reduces the information gap by an average of 0.032 units. This result is interpreted within the frameworks of disclosure theory, agency theory, and signaling theory and is consistent with the domestic and international literature. In contrast, the moderating effect of ownership concentration was not statistically significant (interaction coefficient = −0.001, t = −1.418, p = .157); therefore, ownership concentration neither strengthens nor weakens the relationship between ESG performance and information asymmetry. In other words, the transparency-enhancing property of corporate sustainability operates independently of ownership structure in the Iranian market. By enriching the sustainable finance literature in emerging markets, this study provides practical guidance for managers, investors, and regulatory institutions and emphasizes the need to establish sustainability-reporting requirements and incorporate ESG indicators into investment decision-making.

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