Search Results (71)

Against the backdrop of increasingly severe global carbon emissions and China’s commitment to achieving carbon peaking by 2030, accelerating the transition to a low-carbon economy has become an urgent priority. As fundamental microeconomic entities, enterprises play a crucial role in the national governance of carbon emissions. This study uses panel data on Chinese A share listed companies from 2019 to 2023 and employs fixed effects models that control for firm, year, and industry effect to analyze how ESG performance influences carbon emissions and through which mechanism. The findings indicate that improvements in ESG ratings significantly reduce firms’ carbon emissions. This effect operates primarily through the following two channels: (1) promoting green technological innovation, thereby enhancing environmental performance, and (2) increasing the attention of financial analysts, which strengthens external monitoring. The heterogeneity analysis further reveals that the mitigating effect of ESG improvement on carbon emissions is more pronounced in firms with a lower proportion of institutional ownership, while this effect is relatively weaker in firms with higher institutional ownership. This suggests that in contexts where institutional investors hold a smaller share, firms may place greater emphasis on the policy pressure and social responsibility expectations associated with ESG performance, thereby exhibiting stronger commitment to emission reduction actions. In contrast, in firms dominated by institutional investors, the implementation of ESG policy objectives may be partially compromised due to the investors’ short-term profit orientation. This study provides empirical evidence for firms to fulfill their environmental and social responsibilities and offers actionable insights for investors aiming to promote sustainable development. From a policy perspective, the findings also offer theoretical support for developing differentiated regulatory strategies based on variations in ownership and shareholding structures. Full article

This study explores the relationship between institutional shareholders and climate-related disclosure (CRD) and how sustainability committees influence this relationship among publicly listed Malaysian firms. For the analysis, 990 firm-year observations were studied from 198 highly polluting firms from 2021 to 2024. A strong CRD index was designed using the recognized climate reporting frameworks and well-grounded literature to assess the level of climate-related disclosure. Fixed-effects and hierarchical panel regression models show that CRD increases when institutional investor ownership increases, meaning firms with more institutional investors disclose more information on climate-related topics. In addition, a sustainability committee at the board level greatly improves this relationship by highlighting the positive impact of strong internal governance. As a result, such committees establish climate management and improve communication with investors, making the firm’s actions more transparent. The findings of this study are consistent with agency and legitimacy theories because institutional investors assist in monitoring firms’ environmental performance, and sustainability committees help the company maintain these standards internally. Further, this study helps grow the understanding of corporate governance (CG) and sustainability by pointing out that the presence of institutional owners and sustainability committees can promote openness about climate matters. Accordingly, these findings can guide policymakers, investors, and business leaders in boosting responsible environmental reporting and sustainable business practices in developing countries. Full article

This study examines the impact of capital market openness on corporate green total factor productivity (GTFP) using a quasi-natural experiment based on the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect policies. Employing a multi-period difference-in-differences (DID) approach, the findings reveal that capital market openness significantly enhances corporate GTFP through two primary mechanisms: strengthening firms’ green financial resources and technological innovation (green “hard strength”) and improving corporate environmental governance, green information disclosure, and managerial green expertise (green “soft strength”). Further heterogeneity analysis suggests that firms with greater institutional investor engagement, higher market competition, and non-state ownership exhibit stronger responses. These results provide policy insights into leveraging financial liberalization to drive corporate sustainability and green economic growth. This study highlights the role of financial markets in supporting global carbon neutrality and sustainable development goals. Full article

The primary objective of this study is to investigate the intricate relationship between different ownership structures, such as family, institutional, managerial, and foreign ownership, and tax avoidance practices. It also seeks to explore the moderating influence of female board members in shaping these relationships. This study utilizes balanced panel data from 72 industrial and service firms listed on the Amman Stock Exchange during the period of 2018 to 2023. The Generalized Method of Moments (GMM) was employed to estimate the results. The results indicate that family and foreign ownership positively influence tax avoidance practices, suggesting that families may engage in tax avoidance to benefit from rent extraction, while foreign investors may pressure managers to manipulate tax liabilities or shift profits across countries to minimize taxes. In contrast, the presence of female directors as well as institutional and managerial ownership is associated with a reduction in tax avoidance. Female directors play a moderating role in the relationship between ownership structure and tax avoidance. Their presence in interaction with institutional ownership reduces tax avoidance by focusing on tax compliance strategies. However, this effect changes in family and foreign-owned firms, where control over decision-making lies with the families or foreign shareholders, limiting the impact of female directors in promoting compliance and aligning their role with the tax avoidance strategies preferred by the controlling owners. Full article

In emerging economies, where the legislative and economic landscapes may significantly differ from those of advanced economies, accrual-based earnings management (AEM) is especially problematic for financial disclosure and investor trust. This paper conducts a systematic literature review and a bibliometric analysis to evaluate the incentives for AEM in developing countries and to understand the evolution of the AEM domain within emerging countries. For this purpose, 312 journal articles from ResearchGate, Google Scholar, ScienceDirect, Google, and Scopus, covering the period from 2000 to 2024, were reviewed under various thematic areas. The findings highlighted multiple significant motivators for AEM within developing markets, encompassing financial distress, loss avoidance, profitability pressures, high leverage, weak corporate governance structures and processes, diverse ownership structures (such as concentrated ownership, family ownership, institutional ownership, government ownership, and insider ownership), market performance indicators, political ties, weak regulatory systems, as well as factors such as executive compensation, tenure, career retention, agency issues, investor expectations, audit quality, economic crises, and firm-specific characteristics like size, reputation, and age. This research contributes to existing knowledge by examining the motivations behind AEM in emerging economies, underscoring the need for tailored regulatory frameworks and strong governance structures and processes to address the unique challenges developing nations face. For regulators and policymakers, these findings emphasize the need for robust regulatory frameworks, more stringent auditing protocols, and improved corporate governance structures to discourage business executives from engaging in AEM practices. Full article

This study explores how corporate social responsibility (CSR) disclosure contributes to sustainable value creation by enhancing intellectual capital (IC) and investigates the moderating role of institutional ownership (IIOW) in this relationship. Using a panel dataset of 828 firm-year observations from non-financial Saudi companies listed on the Saudi Stock Exchange (Tadawul) between 2016 and 2021, the analysis applies feasible generalized least squares (FGLS) regression to test the proposed relationships. The findings reveal a significant positive association between CSR disclosure and IC, underscoring the strategic importance of CSR in building intangible corporate assets. Moreover, IIOW strengthens this association, suggesting that IIOW plays a critical role in promoting sustainability-oriented practices. Robustness checks using alternative proxies and estimation techniques confirm the validity of the results. This study provides novel empirical evidence from Saudi Arabia, contributing to the CSR and IC literature in emerging markets and offering practical insights for policymakers, investors, and corporate leaders aiming to foster long-term organizational resilience. Full article

Corporate sustainable development, as a critical component of Chinese-style modernization, is essential for achieving high-quality economic growth, yet the influence of institutional cross-ownership—a prevalent phenomenon in stock markets—on corporate sustainability performance remains contested. Using a sample of Chinese A-share listed companies from 2012 to 2023, this study innovatively employs micro-level data on the degree of the achievement of the United Nations Sustainable Development Goals (SDGs) to measure corporate sustainability performance and investigate the influence of institutional cross-ownership on corporate sustainability performance. This study presents the following findings: (1) Institutional cross-ownership undermines corporate sustainability performance, a finding that remains robust to a series of endogeneity and robustness tests. (2) Mechanism analysis reveals a triple erosion effect: short-termism driven by institutional investors’ preference for immediate financial returns, market power through cross-ownership that dampens competitive pressures, and reduced green innovation investments that weaken sustainability. (3) This negative effect is more pronounced in firms located in high-productivity regions or central and eastern China, in firms facing lax environmental regulations, and in state-owned enterprises. (4) The impact of cross-ownership on sustainability performance varies across dimensions, with the negative effects concentrated in the economic and social dimensions. This study enriches the literature on the factors influencing corporate sustainability performance, providing new empirical evidence for governments to guide institutional investors in long-term value investment and firms to implement effective sustainable development strategies. Full article

The readability of a firm’s financial disclosure has long been used as a variable to predict firm performance and explain investors’ decision-making in the market. We investigate whether readability is informative for non-financial disclosure. Based on signaling theory and a sample of over 10,000 ESG reports released by Chinese public firms, this study explores how readability moderates the relationship between ESG ratings and firm value. Empirical evidence highlights that ESG ratings have a greater influence on firm value for firms releasing more readable ESG reports. The moderating effect of disclosure readability is weakened by firms’ growth potential and institutional ownership due to the extent of information asymmetry in the market. These results are robust to the use of alternative readability measures. This paper contributes to the literature by emphasizing the importance of textual characteristics in sustainability reporting and providing actionable insights for practitioners and policymakers. Full article

Land consolidation is a comprehensive and challenging process in which block boundaries integrate parcels within natural and infrastructural boundaries such as roads, irrigation systems, and drainage networks, acting as a core framework. Effective block design is of critical importance, as it affects the long-term usability and productivity of agricultural parcels. In this study, the criteria effective in block planning were determined using the Analytic Hierarchy Process (AHP), and an attempt was made to determine the priority order of the criteria. The criteria affecting block planning in the study were determined as land slope and topography, soil properties and fertility, climatic conditions, water resources and irrigation facilities, current ownership structure (shareholding), road planning and transportation, environmental and ecological factors, social and economic factors, plant species and agricultural activities, infrastructure and technological facilities, fixed facilities, parcel structure, and existence of projects made or to be made by the investor institutions or organizations. It was determined that the most important of these was the “existence of fixed facilities” criterion. Determining the priority order of the criteria used in block planning also provides the opportunity to use the obtained results in GIS. Full article

This paper employs a novel database to investigate the influence of pressure-sensitive institutional investors (PSIIs) in China on the relationship between managerial climate awareness and firms’ sustainability performance. The paper demonstrates that an increase in pressure-sensitive institutional investors shareholding strengthens the positive impact between managerial climate awareness and firms’ sustainability performance. The existence of robust commercial ties between the majority of pressure-sensitive institutional investors and listed companies enables the transmission of pressure to management teams in the form of constraints on companies’ access to capital. This ultimately promotes firms’ sustainable development. Subsequent research demonstrated that the alignment of interests and risk preferences exerts a more pronounced effect in firms characterized by high managerial ownership. Furthermore, financial support from PSIIs manifests as greater intensity in firms grappling with high financial constraints. The utilization of environmental regulations as a competitive strategy, coupled with the capacity for early implementation, serves to amplify the aforementioned positive effect, particularly in contexts where environmental regulation is minimal. Full article

This study examines the effect of multiple large shareholders (MLS) on environmental, social, and governance (ESG) controversies and the factors that moderate this relationship. It is motivated by the need to understand the determinants of ESG controversies and the lack of consensus in the academic literature regarding the corporate governance role of MLS. Using a panel dataset of Chinese-listed firms from 2008 to 2023, we found that firms with MLS have fewer ESG controversies than non-MLS firms, including those in the environmental, social, and governance dimensions. The findings are robust across different model specifications and alternative variable measurements. Further analyses revealed that the effect of MLS on ESG controversies is more pronounced when the ownership distribution between non-controlling MLS and the controlling shareholder is more balanced, when they have the same identity, and when institutional investors are part of non-controlling MLS. Additionally, this effect is stronger in firms with severe agency conflicts and weaker governance mechanisms. Finally, and more importantly, we found that ESG controversies have a significant negative impact on firm value and that MLS monitoring can help mitigate these adverse effects. In summary, our results suggest that MLS play a monitoring role in ESG controversies and contribute to firm value by reducing their negative consequences. Full article

This study investigates the role of the Big Three passive investors (BlackRock, Vanguard, and State Street) in influencing firms’ cost of equity. By examining the unique ownership structure these investors bring, the research sheds light on a pivotal yet underexplored aspect of institutional ownership and its implications for corporate financing. Using a comprehensive dataset spanning from 1997 to 2016, this study demonstrates that increased ownership by the Big Three is associated with improved disclosure practices and reduced information asymmetry, leading to a lower cost of equity. However, the study also uncovers a nuanced trade-off, as concentrated ownership may introduce liquidity risks in certain contexts. These findings bridge a critical gap in the literature by reconciling divergent perspectives on the role of passive investors and provide actionable insights for institutional investors, regulators, and corporate managers seeking to understand the broader implications of passive ownership on firm valuation and financing strategies. Full article

This study examines stock borrowing costs in Japan’s centralized lendable stock market, focusing on differences between ‘hard-to-borrow’ and ‘easy-to-borrow’ stocks over six months of daily data. This study employs a comprehensive methodology to examine metrics such as the short interest ratio, borrowing costs, institutional ownership, price-to-book value ratio, and new stock borrowing patterns. Regression models are utilized to explore the relationships between these factors and borrowing costs. The findings reveal that ‘hard-to-borrow’ stocks are associated with higher short interest ratios, borrowing costs, price-to-book ratios, and turnover but exhibit lower institutional ownership compared to ‘easy-to-borrow’ stocks. Notably, institutional ownership negatively correlates with borrowing costs across both categories, while the short interest ratio positively correlates with borrowing costs only for ‘hard-to-borrow’ stocks. Contrary to expectations, ‘hard-to-borrow’ stocks do not underperform despite elevated borrowing expenses, suggesting that these costs do not deter short selling activities in the Japanese market. The findings of this study offer key implications for investors and regulators. For investors, understanding the factors influencing borrowing costs aids in optimizing short-selling strategies. For regulators, the results highlight the role of centralized lendable stock markets in enhancing pricing efficiency without hindering trading activities. Full article

This study investigates the relationship between corporate shared institutional equity (SIE) holders and eco-transparency reporting (ETR). Specifically, it examines three distinct types of SIE: (1) common institutional shareholders with industry peers, (2) the average count of unique institutional owners holding shares in both the focal company and its peers, and (3) the total percentage of SIE within the focal company. The findings indicate that firms with higher levels of SIE are more likely to disclose ETR, signaling a commitment to enhancing public trust and aligning with governmental expectations. Furthermore, the study explores the impact of SIE across different stages of the firm’s life cycle, revealing that the influence of SIE on ETR is more pronounced during the growth and mature stages. The results remain robust even when alternative thresholds for SIE are applied, such as adjusting from a 5% to a 3% threshold. To account for potential misspecification and omitted variables, propensity score matching (PSM), System generalized method of moments (Sys GMM) and two-stage least squares (2SLS) methods were employed. This research contributes to the literature by highlighting the role of shared institutional ownership in promoting environmental transparency, offering novel insights into how institutional investors can drive corporate sustainability practices across different firm life cycles. Full article

The effects of greenwashing as a corporate strategy on firm risk are not well defined. I construct a greenwashing measure for 3973 companies from 70 countries from 2012 to 2022. Using Dynamic Panel Modeling, I find results suggesting that greenwashing is a complex phenomenon with both positive and negative consequences. While it can improve a firm’s public image and potentially enhance its financial performance, it may also lead to increased risk and misallocation of resources. Greenwashing firms have a lower weighted average cost of capital due to a higher debt-to-capital ratio. They are larger, have higher institutional ownership, and lower dividend yields. On the other hand, greenwashing firms have more ESG-related controversies that can hurt firm revenues and market value, they have higher unsystematic risk, and they have lower dividend yields and return on equity. I also find evidence that there is a feedback relationship between ESG ratings and greenwashing. There is no evidence that government mandates on ESG reporting inhibit greenwashing. The implication is that ESG scoring that emphasizes reporting ESG activities while informing investors also encourages greenwashing. Full article