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Do institutional investors’ holdings affect corporate environmental information disclosure? Evidence from China

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Abstract

Due to the increasingly serious environmental pollution, stakeholders are paying more attention on the environmental behavior of enterprises. Our paper investigates how institutional investors affect the quality of corporate environmental information disclosure (EID). Using a sample of A-share listed firms from the heavily polluting industries in China during 2008 to 2016, we conduct correlation analysis, OLS regression, and Tobit regression methods and find that institutional investors' shareholdings are positively correlated with the quality of EID. When institutional investors increase 1% shareholdings of the firm, the EID quality improves by 0.03%. In addition, the high concentration of institutional ownership enhances the impact of institutional investors' shareholdings on the EID quality. But this positive correlation is only observed in companies in regions with a high marketization level. Our paper extends the research on the influential factors of EID and improves the understanding of the impact of institutional investors on corporate environmental behavior.

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Notes

  1. The ‘indexing’ technique is widely adopted in the construction of EID index for China’s listed companies. The EID index in Meng et al. (2013), Zeng et al. (2012), and Zhang (2017) covers ten components, while Liu and Anbumozhi (2009) and Li et al. (2019)’s index includes six components. Although the numbers of components in each paper are different, they cover the similar types of information.

  2. It is based on the China's Regional Marketization Index Report (Wang et al., 2017).

  3. We also applied OLS regression to repeat the above tests, and our conclusion remains unchanged.

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Authors and Affiliations

  1. School of Economics and Management, China University of Mining and Technology, Xuzhou, People’s Republic of China

    Qiang Li & Ruotong Li

  2. International Business School, Teesside University, Teesside University, Middlesbrough, TS1 3BX, UK

    Wenjuan Ruan

  3. School of Accounting, Finance and Economics, The University of Waikato, Hamilton, New Zealand

    Hanqiao Li

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  1. Qiang Li
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  2. Wenjuan Ruan
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Correspondence to Qiang Li.

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Li, Q., Ruan, W., Li, R. et al. Do institutional investors’ holdings affect corporate environmental information disclosure? Evidence from China. Environ Dev Sustain 25, 14733–14751 (2023). https://doi.org/10.1007/s10668-022-02686-9

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