Institutional ownership and corporate greenhouse gas emissions: The evidence from China

• Published in: Pacific-Basin finance journal 2023-12, Vol.82, p.102135, Article 102135
• Main Authors: Ren, Xingzi, Dong, Yizhe, Guo, Jie Michael, Liu, Yaodong
• Format: Article
• Language: English
• Subjects: Greenhouse gas (GHG) emissions; Institutional ownership; Policy uncertainty; QFIIs
• ISSN: 0927-538X; 1879-0585
• DOI: 10.1016/j.pacfin.2023.102135

This paper examines the impact of corporate ownership structure on greenhouse gas (GHG) emissions in China, with a focus on the role of institutional investors. Using data on Chinese listed companies, we find that institutional ownership has a significant negative effect on corporate GHG emissions. We also observe that pressure-resistant institutional investors and qualified foreign institutional investors have a more substantial impact on reducing emissions. Our results suggest that institutional investors act as active monitors, influencing corporate behavior through both “exit and selection” and “voice” mechanisms. Furthermore, we find that institutional investors are more concerned with policy uncertainty risk than physical risk. These findings have implications for policymakers and investors seeking to promote sustainable development and address climate change. •Institutional ownership plays a significant role in corporate GHG emission reductions in China.•Impacts of pressure-resistant and qualified foreign institutional investors on GHG emission reductions are more pronounced.•The mechanisms by which institutional investors may influence corporate GHG emissions examined•Institutional investors are more concerned with policy uncertainty risk than physical risk.