How does green investor entry affect corporate carbon performance? Evidence from China

Abstract

As a special kind of institutional investor, green investors are an important driving force in promoting green and low-carbon development of enterprises. Using data from 2008 to 2020 of Chinese A-share non-financial listed firms, this study investigates how the green investor entry affect corporate carbon performance. Results show that green investor entry significantly enhances corporate carbon performance. Mechanism analysis reveals that green investor entry improves corporate carbon performance by improving ESG performance and enhancing environmental information disclosure quality. The positive effects are more pronounced in regions with stringent environmental regulations, heavily polluting industries, and non-state-owned enterprises. In addition, we find that green investor entry significantly improves firms' economic performance while enhancing their carbon performance, simultaneously realizing both economic enhancement and green development. Our results remain robust after a series of robustness and endogenous tests. Overall, our study not only provides direct micro-level evidence from developing economies regarding green investors' role in improving corporate carbon performance, but also offers critical insights for establishing robust green financial mechanisms to facilitate sustainable transformation.