The research team, led by Ibrahim O. A. Eriqat of Smart University College for Modern Education in Hebron, together with Lau Poh Ting and Faros Faizdnor of Asia Pacific University of Technology and Innovation in Kuala Lumpur and Zahra Mohamed El Shlmani of Universiti Sains Malaysia, examined the period from 2019 to 2023. This window captures a turbulent stretch for global supply chains, spanning the pandemic years and their aftermath, when food producers faced intense pressure over emissions, labor practices, and governance standards. By focusing on the food sector, the authors targeted an industry whose environmental footprint, from agricultural sourcing to packaging and distribution, makes it a bellwether for corporate sustainability across emerging and developed Asian markets alike.

Methodologically, the study relied on fixed effects regression, a statistical technique well suited to panel data because it controls for time-invariant characteristics of each firm, such as entrenched corporate culture or geographic location, that might otherwise confound the results. The dependent variable was the overall ESG score of each company, drawn from the LSEG database, formerly known as Refinitiv, one of the most widely used commercial sources of sustainability ratings. The independent variables were constructed with care. The extent of Balanced Scorecard adoption was measured through a content analysis index built from annual report disclosures, capturing how thoroughly firms described performance measurement practices tied to the scorecard framework. Benchmarking exposure was coded as a binary disclosure score, reflecting whether companies reported comparing their performance against peers.

Environmental Management Accounting, the third tool under scrutiny, was proxied by the LSEG Emission Score, a measure reflecting how firms manage environmental information and emissions-related performance. EMA as a discipline involves the identification, collection, and analysis of physical and monetary information about environmental impacts, from energy use and water consumption to waste streams and greenhouse gas outputs. Unlike conventional financial accounting, which treats environmental costs as externalities or lumped overhead, EMA attempts to make those flows visible to managers so they can be priced, reduced, and optimized. The study’s finding that EMA is significantly and positively associated with ESG performance reinforces a growing consensus that what gets measured in environmental terms genuinely gets managed.

The Balanced Scorecard result carries equal weight. Developed in the early 1990s by Robert Kaplan and David Norton, the scorecard was designed to break the tyranny of purely financial metrics by adding customer, internal process, and learning-and-growth perspectives to performance evaluation. Over the decades, many organizations have extended the framework to include sustainability dimensions, embedding environmental and social targets directly into the dashboards that executives review. The Asian food sector data suggest that this integration matters: firms that disclosed richer Balanced Scorecard practices showed significantly stronger ESG outcomes. In effect, when sustainability objectives sit alongside profit targets in the same management apparatus, they are less likely to be sacrificed when trade-offs arise.

Benchmarking, by contrast, emerged from the analysis with no notable impact on ESG performance. This null result is one of the more provocative aspects of the study. Benchmarking, the practice of comparing one’s processes and outcomes against industry leaders or standards, is often promoted as a low-cost route to improvement. Yet the authors’ findings indicate that, at least as disclosed in annual reports across this sample, benchmarking activities do not meaningfully align firms with ESG goals. One plausible interpretation is that benchmarking in practice tends to focus on operational and financial comparators rather than sustainability metrics, or that firms engage in it superficially, treating peer comparison as a reporting exercise rather than a driver of structural change.

Perhaps the most striking finding concerns profitability. The study detected a negative correlation between return on assets and ESG performance, implying potential short-term trade-offs when firms invest in sustainability. This result will resonate with executives who have long argued that environmental and social investments impose costs that depress near-term returns, even as sustainability advocates counter that such investments pay off over longer horizons through risk reduction, regulatory preparedness, and reputational capital. The data from Asian food producers lend empirical texture to this debate, suggesting that in the five-year window studied, the financial burden of sustainability initiatives was real and visible in the bottom line, at least for the more profitable firms in the sample.

The moderating role of corporate ownership adds a governance dimension that elevates the study beyond a simple tool-by-tool audit. The researchers measured corporate ownership as the percentage of outstanding shares held by other corporate entities, using LSEG data. Their analysis showed that ownership exerted a positive moderating influence on the relationship between the accounting tools and ESG outcomes. In plain terms, the same accounting instruments appeared to work better, producing stronger ESG gains, when a meaningful share of the company was held by other corporations. The authors interpret this as evidence that governance structure shapes the effectiveness of ESG-related management practices, with corporate owners potentially supplying monitoring, resources, and strategic discipline that amplify the impact of measurement systems.

This ownership effect has practical implications that ripple well beyond the food aisle. Institutional investors and parent companies often position themselves as stewards of sustainability, pressing portfolio firms to adopt reporting frameworks and performance targets. The study’s results suggest that such stewardship is not merely rhetorical: the presence of corporate owners appears to convert accounting tools from passive reporting devices into active levers of ESG improvement. For policymakers in Asian markets considering mandatory ESG disclosure regimes, the finding hints that rules targeting ownership transparency and governance quality may complement disclosure mandates, since the machinery of measurement seems to function best within certain governance configurations.

The study also controlled for firm size, leverage, and age, using the natural logarithm of total assets, the ratio of total debt to total assets, and years since establishment respectively, to isolate the effects of the accounting variables from structural differences among companies. The research received no external funding, and the authors declare no competing interests. Published open access under a Creative Commons license, the work invites replication in other sectors and regions, a necessary step before its conclusions can be generalized. Still, for a region whose food industry feeds billions and whose emissions footprint continues to grow, the message is clear and actionable: the Balanced Scorecard and Environmental Management Accounting are not bureaucratic relics but strategic instruments capable of embedding sustainability into corporate decision-making, and their power depends substantially on who owns the enterprise and how seriously that owner takes its governance role.

Subject of Research: The effect of management accounting tools and corporate ownership on ESG performance in Asian publicly traded food firms

Article Title: Corporate ownership and the effectiveness of management accounting tools in enhancing ESG performance

Article References: Eriqat, I. O. A., Ting, L. P., El Shlmani, Z. M., & Faizdnor, F. (2026). Corporate ownership and the effectiveness of management accounting tools in enhancing ESG performance. Discover Sustainability. https://doi.org/10.1007/s43621-026-04776-4

Image Credits: AI Generated

DOI: 10.1007/s43621-026-04776-4

Keywords: ESG performance, management accounting, Balanced Scorecard, Environmental Management Accounting, benchmarking, corporate ownership, corporate governance, food industry, Asia, sustainability, fixed effects regression, Discover Sustainability

Tunneling occurs when controlling shareholders exploit their positional advantage to divert assets, profits or business opportunities away from minority investors. Common manifestations include related-party transactions priced to favor the controlling owner, loans and advances extended to affiliates that are never repaid on commercial terms, guarantees issued for the private benefit of connected parties, and outright misappropriation of funds. Because controlling shareholders typically hold voting power disproportionate to their cash-flow rights, the private gains from tunneling can exceed their share of the losses inflicted on the firm, making the practice rational for the dominant owner even as it destroys value for everyone else.

The study measures tunneling primarily through the net level of other receivables that controlling shareholders and their related parties owe to the listed firm, a widely used proxy in Chinese empirical research because misappropriated funds often sit on the balance sheet in this form. The authors construct this measure from firms’ annual reports and combine it with ESG performance scores, allowing them to test statistically whether companies that score higher on environmental, social and governance dimensions exhibit less evidence of resource diversion by their dominant owners.

The empirical findings are consistent: higher ESG performance is associated with significantly lower tunneling by controlling shareholders. The relationship survives a battery of robustness checks, including alternative measures of both ESG performance and tunneling, adjustments for the potential endogeneity of ESG choices, and the use of instrumental-variable and lagged-value strategies to address the concern that causality might run the other way. Firms with stronger ESG profiles, the results suggest, are systematically less likely to see their resources siphoned off by insiders with control.

Why would environmental and social responsibility discipline a controlling shareholder who wants to raid the till? The study identifies several interlocking mechanisms. First, ESG performance functions as a reputational asset. A controlling shareholder contemplating tunneling must weigh the private benefit of diversion against the cost of damaging a hard-won public image of responsible stewardship. Because ESG ratings are increasingly visible to investors, regulators, business partners and international capital, the reputational penalty of exposure rises with the firm’s ESG standing, tipping the cost-benefit calculation away from expropriation.

Second, the information channel matters. High-ESG firms tend to attract greater scrutiny from analysts, institutional investors, media and rating agencies, all of which increase the transparency of corporate transactions and raise the probability that related-party dealings will be detected and challenged. ESG-oriented firms also tend to have stronger internal governance structures, including more independent boards and better internal controls, which directly obstruct the approval and concealment of tunneling transactions. Third, external financing pressure reinforces the effect. Firms that want to tap capital markets on favorable terms, particularly foreign institutional investors who increasingly apply ESG screens, have a concrete financial incentive to protect minority shareholders, and refraining from tunneling is a prerequisite for that credibility.

The research also explores heterogeneity, revealing that the disciplining effect of ESG is not uniform across corporate China. The restraining influence of ESG performance on tunneling is stronger in firms with lower external audit quality, weaker investor protection environments and higher financing constraints, conditions under which the reputational and informational safeguards associated with ESG substitute for other governance mechanisms. State-owned enterprises show different patterns from private firms, reflecting the distinct incentives and political constraints that shape managerial and shareholder behavior in each ownership category. These findings suggest that ESG performance operates as a governance substitute precisely where traditional mechanisms are weakest, a result with clear policy relevance for emerging markets.

The Chinese setting makes the study particularly consequential. China’s capital markets host thousands of listed firms in which a single family, founder or state entity typically retains effective control, while minority shareholders provide much of the capital. The separation between control and cash-flow rights, often amplified through pyramidal structures and cross-holdings, creates fertile ground for expropriation, and Chinese regulators have repeatedly tightened rules on related-party transactions and fund misappropriation. Yet enforcement remains uneven, and the study’s results point to a market-based complement to regulation: if firms can be induced to genuinely improve ESG performance, minority investors gain a partially self-enforcing shield against insider expropriation.

The study carries implications well beyond China. Global investors have poured trillions of dollars into ESG-labelled assets, and critics have questioned whether ESG scores capture anything economically meaningful. This research contributes a concrete answer in one important domain: ESG performance is associated with tangible reductions in a specific, measurable form of corporate misgovernance. For asset managers, the results imply that ESG ratings may convey information about the risk of expropriation in emerging-market holdings that conventional financial analysis can miss. For standard-setters and exchanges, the evidence supports policies that integrate ESG disclosure requirements with related-party transaction oversight, since the two mechanisms appear to operate synergistically.

The authors are careful to frame the findings within their limitations. ESG ratings themselves vary across providers, tunneling can take forms not captured by the receivables proxy, and the Chinese institutional context, with its distinctive ownership structures and regulatory environment, may limit generalization to markets where ownership is dispersed. Still, the central message stands: corporate responsibility performance is not decoration. In the battle between controlling shareholders and the minority investors who fund them, credible environmental, social and governance conduct shifts real resources, reducing the leakage of corporate wealth and strengthening the integrity of emerging capital markets from the inside out.

Subject of Research: The relationship between corporate ESG performance and controlling shareholder tunneling in Chinese listed companies

Article Title: Could corporate ESG performance impacts controlling shareholders tunneling: evidence from China

Article References: Could corporate ESG performance impacts controlling shareholders tunneling: evidence from China. (n.d.). https://doi.org/10.1038/s41599-026-08977-0

Image Credits: AI Generated

DOI: 10.1038/s41599-026-08977-0

Keywords: ESG performance, tunneling, controlling shareholders, corporate governance, China, listed companies, related-party transactions, minority shareholders, emerging markets, agency problems, misappropriation, state-owned enterprises