Institutional ownership drives a new strategy for green total factor productivity development of Chinese listed companies: Effects, mechanisms, and implications

Abstract

The low-carbon transformation of China's economy is urgent, and the innovation of core technologies related to it cannot be without financial support. Given the limited availability of green funding, it is imperative to seek the help of social funding more widely. Among them, the impact of institutional ownership (IO) on the green total factor productivity (GTFP) at micro level cannot be ignored. This study employs a panel fixed-effects model to examine the influence of IO on the GTFP of 4582 Chinese A-share listed companies and explore potential pathways. The research findings indicate that: (1) IO can improve the GTFP of investee companies. (2) this impact may occur through the influence of IO on the invested company's financing constraints, R&D expenditures, green innovation, environmental performance, ultimately driving its GTFP. (3) different types of institutional investors exhibit varying performance in promoting the GTFP of the invested company. Particularly, pressure-sensitive institutional investors with strong business relevance to the invested companies demonstrate impressive results. (4) IO exhibits a more significant promoting effect on the GTFP of listed companies in specific samples. This study provides a new strategy for promoting green economic growth in China, and summarizes some targeted policy implications.