Institutional Investor Legal Origins and Corporate GHG Emissions Disclosure Quality

51 Pages Posted: 7 Dec 2020

See all articles by Simon Döring

Simon Döring

University of Hamburg

Wolfgang Drobetz

University of Hamburg

Sadok El Ghoul

University of Alberta - Campus Saint-Jean

Omrane Guedhami

University of South Carolina - Moore School of Business

Henning Schröder

University of Hamburg - Hamburg Business School; Hamburg Financial Research Center

Date Written: November 5, 2020

Abstract

Disclosure of corporate environmental performance has become a critical element of firms’ overall ethical behavior. We examine how foreign institutional ownership and its legal origin affect the quality of carbon disclosure. Using a large sample of firms from thirty-six countries, we find that foreign institutional ownership from civil law countries tends to improve the quality of a firm’s greenhouse gas (GHG) emissions reporting. This is borne out by emissions verification levels and Carbon Disclosure Project scores. The relationship appears causal, and is not affected by selection bias. The effect is stronger in firms from common law countries, i.e., when the gap between firms’ corporate social responsibility (CSR) standards and investors’ CSR targets is potentially larger, and in less international firms, suggesting that foreign investors substitute for lower levels of internationalization. Additional analyses also indicate that firms with better GHG emissions reporting quality receive higher valuations.

Keywords: Carbon disclosure, corporate environmental responsibility, institutional investors, foreign ownership, legal origin

Suggested Citation

Döring, Simon and Drobetz, Wolfgang and El Ghoul, Sadok and Guedhami, Omrane and Schröder, Henning, Institutional Investor Legal Origins and Corporate GHG Emissions Disclosure Quality (November 5, 2020). Available at SSRN: https://ssrn.com/abstract=3725355 or http://dx.doi.org/10.2139/ssrn.3725355

Simon Döring

University of Hamburg ( email )

Moorweidenstraße 18
Hamburg, 20148
Germany

Wolfgang Drobetz

University of Hamburg ( email )

Moorweidenstrasse 18
Hamburg, 20148
Germany

Sadok El Ghoul (Contact Author)

University of Alberta - Campus Saint-Jean ( email )

Edmonton, Alberta T6G 2R3
Canada
780-465-8725 (Phone)
780-465-8760 (Fax)

Omrane Guedhami

University of South Carolina - Moore School of Business ( email )

Columbia, SC
United States

Henning Schröder

University of Hamburg - Hamburg Business School ( email )

Moorweidenstr. 18
Hamburg, 20148
Germany

Hamburg Financial Research Center ( email )

c/o University of Hamburg
Moorweidenstr. 18
Hamburg, 20148
Germany

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