Does institutional investors’ environmental attention influence corporate environmental investment?

Abstract

We use the number of questions related to the environmental governance of listed companies raised by institutional investors during site visits to proxy the institutional investors’ environmental attention and explore how it drives firms’ environmental investment. The results show that institutional investors’ environmental attention during site visits positively relates to the visited firms’ environmental investment. This positive effect is more significant in non-state-owned enterprises and firms with low financing constraints. Moreover, institutional investors’ environmental attention mainly promotes visited firms’ environmental investment through monitoring and media coverage’s information dissemination channels. This study contributes to the crucial effects of informal environmental regulations on corporate environmental governance.