Do foreign institutional investors influence corporate climate change disclosure quality? International evidence

IF 4.6 3区管理学 Q1 BUSINESS

Corporate Governance-An International Review Pub Date : 2023-05-24 DOI:10.1111/corg.12535

Sudipta Bose, Edwin KiaYang Lim, Kristina Minnick, Syed Shams

{"title":"Do foreign institutional investors influence corporate climate change disclosure quality? International evidence","authors":"Sudipta Bose, Edwin KiaYang Lim, Kristina Minnick, Syed Shams","doi":"10.1111/corg.12535","DOIUrl":null,"url":null,"abstract":"<div>\n \n \n <section>\n \n <h3> Research Question/Issue</h3>\n \n <p>We examine the association between foreign institutional ownership and climate change disclosure quality from 2006 to 2018 across 34 countries. We find that firms with a higher level of foreign institutional ownership demonstrate better quality climate change disclosures, whereas domestic institutional ownership has immaterial impacts on such disclosures. We utilize a difference-in-differences (DiD) analysis using a firm's addition to the Morgan Stanley Capital International (MSCI) index as an exogenous shock to control for endogeneity. Our findings are robust to various other endogeneity controls. We also establish evidence on an indirect effect of climate change disclosure quality in mediating the positive association between foreign institutional investors and firm valuation.</p>\n </section>\n \n <section>\n \n <h3> Research Findings/Insights</h3>\n \n <p>We find that the positive association between foreign institutional ownership and climate change disclosure quality is more pronounced for (1) firms domiciled in stakeholder-orientated countries, (2) firms domiciled in countries that adopt emission trading schemes, and (3) firms with a greater level of information asymmetry. Additionally, our results are more robust when foreign investors are domiciled in countries that care more about the environment.</p>\n </section>\n \n <section>\n \n <h3> Theoretical/Academic Implications</h3>\n \n <p>Our study contributes to climate change disclosures, corporate governance, and international business literature by showing that foreign rather than domestic institutional investors contribute to improved corporate climate change disclosure quality in their portfolio firms.</p>\n </section>\n \n <section>\n \n <h3> Practitioner/Policy Implications</h3>\n \n <p>Our study urges regulators to increase their market oversight, especially in firms with less foreign institutional ownership. This is required because such firms are prone to exhibiting poorer accountability for their climate risk management practices, and their disclosures are bereft of effective external monitoring mechanisms.</p>\n </section>\n </div>","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"32 2","pages":"322-347"},"PeriodicalIF":4.6000,"publicationDate":"2023-05-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/corg.12535","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Corporate Governance-An International Review","FirstCategoryId":"91","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/corg.12535","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS","Score":null,"Total":0}

引用次数: 0

Abstract

Research Question/Issue

We examine the association between foreign institutional ownership and climate change disclosure quality from 2006 to 2018 across 34 countries. We find that firms with a higher level of foreign institutional ownership demonstrate better quality climate change disclosures, whereas domestic institutional ownership has immaterial impacts on such disclosures. We utilize a difference-in-differences (DiD) analysis using a firm's addition to the Morgan Stanley Capital International (MSCI) index as an exogenous shock to control for endogeneity. Our findings are robust to various other endogeneity controls. We also establish evidence on an indirect effect of climate change disclosure quality in mediating the positive association between foreign institutional investors and firm valuation.

Research Findings/Insights

We find that the positive association between foreign institutional ownership and climate change disclosure quality is more pronounced for (1) firms domiciled in stakeholder-orientated countries, (2) firms domiciled in countries that adopt emission trading schemes, and (3) firms with a greater level of information asymmetry. Additionally, our results are more robust when foreign investors are domiciled in countries that care more about the environment.

Theoretical/Academic Implications

Our study contributes to climate change disclosures, corporate governance, and international business literature by showing that foreign rather than domestic institutional investors contribute to improved corporate climate change disclosure quality in their portfolio firms.

Practitioner/Policy Implications

Our study urges regulators to increase their market oversight, especially in firms with less foreign institutional ownership. This is required because such firms are prone to exhibiting poorer accountability for their climate risk management practices, and their disclosures are bereft of effective external monitoring mechanisms.

Abstract Image

查看原文本刊更多论文

外国机构投资者是否影响企业气候变化披露质量？国际证据

研究问题/议题我们研究了 2006 年至 2018 年期间 34 个国家的外国机构所有权与气候变化信息披露质量之间的关系。我们发现，外国机构持股比例较高的公司所披露的气候变化信息质量更高，而国内机构持股比例对此类信息披露的影响不大。我们利用差异分析法（DiD），将公司加入摩根士丹利资本国际（MSCI）指数作为外生冲击来控制内生性。我们的研究结果对其他各种内生性控制措施都是稳健的。我们还证实了气候变化信息披露质量对外国机构投资者与公司估值之间正相关关系的间接中介效应。研究结果/见解我们发现，外国机构所有权与气候变化信息披露质量之间的正相关关系在以下情况下更为明显：（1）公司注册地位于利益相关者导向型国家；（2）公司注册地位于采用排放交易计划的国家；（3）信息不对称程度较高的公司。此外，当外国投资者所在的国家更加关注环境时，我们的研究结果更加可靠。理论/学术意义我们的研究表明，外国而非国内机构投资者有助于提高所投资企业的气候变化信息披露质量，从而为气候变化信息披露、公司治理和国际商业文献做出了贡献。实践者/政策影响我们的研究敦促监管机构加强市场监督，尤其是在外国机构持股较少的公司。这是必要的，因为这类公司在气候风险管理实践中容易表现出更差的责任感，而且它们的信息披露缺乏有效的外部监督机制。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

Corporate Governance-An International Review Multiple-

CiteScore

7.00

自引率

11.30%

发文量

期刊介绍： The mission of Corporate Governance: An International Review is to publish cutting-edge international business research on the phenomena of comparative corporate governance throughout the global economy. Our ultimate goal is a rigorous and relevant global theory of corporate governance. We define corporate governance broadly as the exercise of power over corporate entities so as to increase the value provided to the organization"s various stakeholders, as well as making those stakeholders accountable for acting responsibly with regard to the protection, generation, and distribution of wealth invested in the firm. Because of this broad conceptualization, a wide variety of academic disciplines can contribute to our understanding.