scholarly journals Do sustainable institutional investors contribute to firms’ environmental performance? Empirical evidence from Europe

2021 ◽  
Author(s):  
Othar Kordsachia ◽  
Maximilian Focke ◽  
Patrick Velte
Keyword(s):  
Institutional Investors ◽  
Environmental Performance ◽  
Institutional Ownership ◽  
Institutional Investor ◽  
Research Area ◽  
Business Practices ◽  
Responsible Investment ◽  
Green Business ◽  
The Relationship

AbstractIn light of current climate change discussions, this paper analyzes the effect of ownership structure on a firm’s environmental performance with a subsequent focus on corporate emission reduction. Based on a cross-national European sample consisting of 7384 firm-year observations between 2008 and 2017, this study explores the relationship between sustainable institutional investors and environmental performance. In line with prior research and embedded in an agency theoretical framework, the nature of institutional investors may act as a stimulating driver towards green business practices. Sustainable institutional investors are defined based on their signatory status to the UN Principles for Responsible Investment and their (long-term) investment horizons. The first classification stems from a content-driven sustainability perspective, while the second is derived from temporal sustainability. The results indicate that sustainable institutional ownership is positively associated with a firm’s environmental performance. Further investigations reveal that sustainable institutional investor ownership is also positively associated with firms’ willingness to respond to the Carbon Disclosure Project. These results indicate a higher carbon-risk awareness in firms with greater sustainable institutional investor ownership. Our paper significantly contributes to prior empirical research on institutional ownership and environmental performance and offers useful theoretical and practical implications. It focusses on a still-underdeveloped research area, namely organizations and their relationships with the natural environment, including institutional equity ownership as a driver towards greener practices on a corporate level.

Is institutional investor a supervisor or cooperator?

2018 ◽  
Vol 9 (1) ◽  
pp. 2-18 ◽  
Author(s):  
Yuedong Li ◽  
Xianbing Liu ◽  
Qing Yan
Keyword(s):  
Institutional Investors ◽  
Institutional Investor ◽  
Test Methods ◽  
Future Research ◽  
Management Turnover ◽  
Content Type ◽  
Financial Restatement ◽  
Strategic Cooperation ◽  
Financial Restatements ◽  
The Relationship

Purpose The purpose of this paper is to discuss whether top management will assume their liabilities especially when financial restatement occurs, and,based on the “effective supervision theory” and “strategic cooperation theory,” to examine whether an institutional investor is a supervisor or a cooperator considering the management turnover caused by financial restatement in the companies. Design/methodology/approach Using a sample of the A-share-listed companies from year 2010 to year 2014 and dividing financial restatement into fraudulent financial restatement and other financial restatement, the authors examine the relationship between financial restatement and abnormal management turnover, which usually is related to the management integrity or capacity. By using group test methods, the authors test the influence of the institutional investors’ shareholding on the relation between financial restatements and management turnover. Findings This paper finds that financial restatement can result in abnormal management turnover, especially the fraudulent financial restatement. The institutional investors usually are supervisors but when the shareholding of institutional investor is too high and the management turnover results from fraudulent financial restatement, the institutional investors may become cooperators with management in the companies. Besides, the institutional investors play the supervisory function more significantly in non-state-owned enterprises. Originality/value This paper expands literature of the institutional investors in the corporate governance area and provides a basis for future research in the area of the institutional investors’ governance effect. It divides financial restatements into fraudulent financial restatement and other financial restatement and examines the relationship between financial restatement and abnormal management turnover so as to provide evidence about whether the management will assume their responsibilities when there is financial restatement in the company. It also tests whether the institutional investors will play supervisor’s or cooperator’s function in state-owned and non-state-owned enterprises.

Connecting the Dots

2017 ◽  
pp. 26-41
Author(s):  
Olajumoke Ogunsanya
Keyword(s):  
Creative Thinking ◽  
Business Practices ◽  
Business Organizations ◽  
Sustainable Business ◽  
Term Survival ◽  
Collective Creativity ◽  
Connecting The Dots ◽  
Creativity And Innovation ◽  
The Relationship

Calls for businesses to act with concern for the environment and society create new operating scenarios in which sustainability concerns must be taken into consideration along with the primary objectives of profitability and competitiveness. These additional obligations contribute to dynamism of the marketplace and make it important for businesses to draw on creativity and innovation to find connections between the unrelated in order to establish new efficiencies that can create competitive advantage and differentiation in the environment they find themselves. The central theme of this chapter is how bisociation informs collective creativity and innovation, and influences sustainability for business organizations competing in an environment that is in a permanent state of flux. This chapter trails a series of concepts to find the relationship between the concept of bisociation, collective creativity and sustainable business practices. The aim is to show how consistent creative thinking and exploration of information in different spaces of thought can proffer innovative solutions organizations require for their long term survival and prosperity.

PENGARUII CORPORATE GOWRNANCE TERIIADAP STRUKTUR MODAL DAN KINERJA PERUSAHAAI\: STUDI EMPIRIS PADA FAMILY BASINESS GROUP YANG TERDAFTAR DI BURSA EFEK JAKARTA

2007 ◽  
Vol 2 (1) ◽  
pp. 23
Author(s):  
Freddy Iston Hasil Marbudi Pangaribuan
Keyword(s):  
Capital Structure ◽  
Internal Control ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Managerial Ownership ◽  
Short Term ◽  
Internal Mechanism ◽  
Big Six ◽  
The Relationship

The aim of this research is to examine the effect of corporate governancet's internal mechanism that ls institutionii o*r"rriip, oi both firm performance and firm capital structure. To the extent, the moderating effect of managerial ownership on the relationship between institutional ownership,-fir* performance and capital structure wilt be examined as well.The sample of this research is drar,vn fro* companies within the big six family,owned business in Indonesia, which are listed at The Jakarta Stock Exchange fro* 1998 until 2005. Using the Moderated Regression Analysis (MRA),. the result shows that both institutional and managerial ownership fail to demonstrate the direct and moderated effect on both performance and capital structure. These findings suggest that the froil of economic, social and political circumstances create the "short term-focused" toward investment return. Moreover, the slow achiqement of collusion, corruption, and nepotism (KI< I) eradication has resulted in sudden-withdrawal of investor's investment. Hence, the internal control mechanism of corporate governance which is long-term focused and associated with KKI{ eradi cation cannot b e su cc es sfully impl em ent ed.Keywords: Institutional ownership, managerial ownership, performance,capital structure

Institutional Ownership and Corporate Social Performance in Emerging Economies Multinationals: Evidence from India

2020 ◽  
Vol 13 (2) ◽  
pp. 227-252
Author(s):  
Sandeep Yadav
Keyword(s):  
Institutional Investors ◽  
Multinational Firms ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Institutional Ownership ◽  
Risk Behaviour ◽  
The Social ◽  
Corporate Social ◽  
Institutional Owners ◽  
The Relationship

This study fills the gap in the literature by considering the heterogeneous impact of institutional ownership on various dimensions of corporate social performance (CSP). Using the behavioural risk agency perspective, we argue that the risk behaviour of various institutional owners is not the same towards the CSP. We have taken a balanced panel sample of 61 Indian multinational firms for the span of 2013–2018 to test the proposed hypotheses. Results show a negative association of pressure-sensitive institutional investors’ ownership with social and governance dimensions of CSP. Mutual funds ownership is positively associated with the social and governance dimensions of CSP. Foreign institutional investors ownership has no significant impact on CSP. We found that the environmental dimension of CSP is ignored by institutional owners. The moderating effect of firm internationalisation on the relationship between institutional ownership and CSP is also examined.

scholarly journals Role of Foreign and Domestic Institutional Investors in Corporate Sustainability: Focusing on R&D Investment

2020 ◽  
Vol 12 (20) ◽  
pp. 8754 ◽  
Author(s):  
Ilhang Shin ◽  
Sorah Park
Keyword(s):  
Institutional Investors ◽  
Corporate Sustainability ◽  
Institutional Ownership ◽  
Ordinary Least Squares ◽  
Sustainable Growth ◽  
Least Squares Regression ◽  
Variable Approach ◽  
Managerial Myopia ◽  
D Investment

This paper examines the effects of ownership by foreign and domestic institutional investors on corporate sustainability by focusing on the level of research and development (R&D) investment. Long-term investment in R&D is crucial for companies that seek to generate sustainable growth. Ordinary least-squares regression is performed on a sample of Korean listed companies. The main test with both foreign and domestic institutional ownership is based on a study period from 2001 to 2004. The results indicate that firms with higher levels of foreign institutional ownership exhibit greater levels of corporate R&D activities, while the ownership by domestic institutions has no significant influence on firms’ R&D investment. An additional test with foreign institutional ownership data is based on an extended study period from 2001 to 2014, and shows that foreign institutional ownership is positively related to firms’ R&D investment. This result survives the two-stage instrumental variable approach used to address endogeneity factors in foreign institutional ownership. Taken together, these findings suggest that foreign institutions can effectively monitor managerial myopia and promote corporate innovations.

scholarly journals Institutional Investors' Monitoring Roles in State Controlled Firms and Income Smoothing Analysis for Stable Growth and Sustainability: Focusing on China Stock Market

2021 ◽  
Author(s):  
Meng-Jun Xu ◽  
Dong-Il Kim
Keyword(s):  
Sustainable Development ◽  
Private Information ◽  
Institutional Investors ◽  
Corporate Sustainability ◽  
Income Smoothing ◽  
Individual Investors ◽  
Stable Growth ◽  
Using Data ◽  
The Relationship

The purpose of this study is to examine the relationship between the institutional investors which can affect financial performance for corporate sustainability on the income smoothing. Therefore, this study focus on the connection between the nature of stock rights and income smoothing in China. For this study, hypotheses were established on the relationship each state-controlled companies, income smoothing, and information equilibrium of individual investors, and empirical analysis was conducted through related variables. The analysis results are summarized in three categories as follows. First, this research finds that state-controlled firms (CONTs) prefer income smoothing activities compared to non-state-controlled firms for the long-term sustainable development of firms using data from 2011 to 2019. Second, this study found out that Institutional investors support the behavior of CONTs to smooth their earnings because this behavior is seen as an attempt by CONTs to convey valuable private information to other investors. Third, we was able to discover that institutional investors' monitoring effect is predominantly driven by pressure-resistant institutional investors. This research complements the lack of empirical research on income smoothing and enable to give a guideline that the type of stock rights is a critical key determinant of participation in income smoothing activities for stable growth and sustainability in the future.

scholarly journals Performance in financial services: Does institutional ownership matter?

2019 ◽  
Vol 16 (2) ◽  
pp. 108-120 ◽  
Author(s):  
Ping Wang ◽  
James Barrese ◽  
David Pooser
Keyword(s):  
Financial Services ◽  
Fixed Effects ◽  
Institutional Ownership ◽  
Institutional Investor ◽  
Insurance Companies ◽  
Statistical Relation ◽  
Significant Relation ◽  
State Street ◽  
Autoregressive Conditional Heteroscedasticity

Institutional investor ownership has often been considered a corporate governance variable, typically used to proxy those investors’ ability to influence managers and to expropriate wealth from smaller shareholders. Large institutional investors have developed common holdings across numerous firms within industries. We consider the effects of institutional investor ownership on the performance of banks and insurance companies. Using a generalized autoregressive conditional heteroscedasticity model with firm- and year-fixed effects, we find strong statistical relation between performance and individual firm’s ownership stakes by Blackrock, Inc. and Fidelity Investments. Moreover, we find a positive and statistically significant relation between performance and the percentage of the industry’s equity owned by the Blackrock, Fidelity, State Street and Vanguard. The findings suggest that organizations like Blackrock are successful in obtaining long-term returns by exerting influence over the management of their invested firms, which is consistent with recent statements by the CEO of Blackrock but is also consistent with a “bet on the winners” strategy.

scholarly journals Institutional ownership, environmental, social, and governance performance and disclosure – a review on empirical quantitative research

2020 ◽  
Vol 18 (3) ◽  
pp. 282-305
Author(s):  
Patrick Velte
Keyword(s):  
Literature Review ◽  
Quantitative Research ◽  
Institutional Ownership ◽  
Archival Studies ◽  
Major Research ◽  
Research Gaps ◽  
Financial Consequences ◽  
The Relationship ◽  
Mediator Variable

Since the financial crisis of 2008–2009, nonfinancial-related shareholder activism increased, as public interest entities (PIEs) should strengthen their environmental, social, and governance (ESG) activities. This study aims to determine whether institutional ownership (IO) impacts ESG performance and disclosure and vice versa. Moreover, IO’s moderating and mediating influence on the relationship between ESG and firms’ financial consequences is included. This is the first literature review focusing on IO and ESG, describing IO as independent, dependent, moderator, and mediator variable. A structured literature review with 81 empirical-quantitative (archival) studies on that topic is presented based on an agency theoretical framework. Regarding the main results, long-term IO leads to increased ESG performance. Moreover, ESG performance promotes the ratio of institutional investors. Other relationships are rather heterogeneous and too low in an amount yet, stressing major research gaps.

Director attributes and institutional investor choices: evidence in Latin America

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Carlos Pombo ◽  
Maria Camila De La Hoz
Keyword(s):  
Latin America ◽  
Board Of Directors ◽  
Institutional Investors ◽  
Emerging Market ◽  
Institutional Ownership ◽  
Institutional Investor ◽  
Professional Experience ◽  
Content Type ◽  
Board Capital ◽  
The Board Of Directors

PurposeThis paper examines how the board of directors' attributes in terms of educational and professional backgrounds –that is board capital-, and demographics influence institutional ownership across listed companies in Latin America.Design/methodology/approachBased on unique hand-collected information of directors' educational and professional attributes across 427 firms in Latin America, the authors analyze the effects of directors' educational attainment, professional experience and demographic diversification on institutional investors' holdings.FindingsResults show that grey investor ownership favors directors with graduate studies and diverse boards regarding gender and nationality. Independent investors value the directors' professional experience like former founders of a firm. Grey investors are more concerned with firm corporate governance mechanisms, consistent with the agency view. In contrast, independent institutional investors focus on business opportunities following the board of directors' resource-based view.Research limitations/implicationsThis study shows that board capital becomes a key determinant for institutional ownership in emerging markets.Originality/valueThis study extends previous literature on institutional investor preferences by providing empirical evidence that firm board capital becomes a collective asset that is central for institutional investors' investment choices for an emerging market case.

Institutional Investors and CEO Pay Performance in Malaysian Firms

2018 ◽  
Vol 17 (1) ◽  
pp. 87-102 ◽  
Author(s):  
Tee Chwee Ming ◽  
Yee-Boon Foo ◽  
Ferdinand A. Gul ◽  
Abdul Majid
Keyword(s):  
Firm Performance ◽  
Institutional Investors ◽  
Ceo Compensation ◽  
Positive Association ◽  
Institutional Ownership ◽  
Institutional Investor ◽  
Ceo Pay ◽  
Negative Effect ◽  
Foreign Institutional Investors ◽  
Jel Classifications

ABSTRACT This study uses Malaysian data to examine whether institutional investors affect the association between firm performance and CEO compensation. Overall, we find that total institutional investor ownership has a negative effect on the positive association between firm performance and CEO compensation, which suggests ineffective monitoring. When the institutional investors are categorized into local and foreign, we find that the negative effect is driven by local institutional ownership, consistent with the argument that foreign institutional investors are associated with better monitoring. Our results provide new insights on the association between institutional investors and the CEO compensation-firm performance relationship in an emerging economy. JEL Classifications: G34; J33.

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