Institutional Investors and Corporate Environmental and Financial Performance
European Financial Management, forthcoming
58 Pages Posted: 2 Mar 2020 Last revised: 12 Sep 2022
Date Written: August 18, 2022
We propose a conceptual framework to illustrate that when three conditions hold, institutional investors moderate a positive relation between corporate financial performance (CFP) and corporate environmental performance (CEP). We explore heterogeneities across institution types to demonstrate the importance of each condition. The moderating effect works through the channels of expert consulting and effective monitoring. Our results have important policy and practical implications given the global trend of ownership concentration in institutional investors and the projection that by 2025, one out of three dollars under professional management will be invested in corporate social responsibility (CSR) assets.
Keywords: Corporate environmental performance; Environmental, social, and governance; Sustainability; Institutional investors; Shareholder theory; Stakeholder theory; Delegated philanthropy theory
JEL Classification: D22; G34; M14
Suggested Citation: Suggested Citation