Institutional Investors and Corporate Environmental Innovation
37 Pages Posted: 12 Jan 2021 Last revised: 9 Aug 2021
Date Written: August 7, 2021
This paper addresses whether institutional investors drive firms' innovation direction toward environmentally friendly technologies. The data pertain to comprehensive environmental patents filed by Chinese publicly-listed firms in the manufacturing and public utility sectors during the 2003-2015 period. We find that institutional investors are associated with higher ratios of environmental patents in total patents for firms in the pollution-intensive sectors than those in the non-pollution-intensive sectors. Institutional investors exert the roles of financial support and corporate governance in pursuit of monitoring firms' long-term sustainable innovation. They further facilitate the information disclosure on corporate social responsibility. Lastly, institutional investors are motivated by financial returns.
Keywords: Institutional Investors; Environmental Innovation; Patent; Corporate Social Responsibility
JEL Classification: G23, G30, M14, O30
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