Institutional ownership and environmental reporting

Abstract

This study examines the relationship between institutional ownership and environmental reporting, aiming to explore how the presence of institutional investors influences the quality and extent of ecological disclosures by publicly traded companies. Using a quantitative research approach, the study analyzes panel data from 152 publicly listed firms across ten years (2014-2023), employing a random effects model (REM) regression to assess the impact of institutional ownership on environmental reporting scores derived from content analysis of annual and sustainability reports. The findings reveal a positive and statistically significant association, indicating that higher levels of institutional ownership are linked to more comprehensive environmental reporting. This suggests that institutional investors, driven by sustainability goals and regulatory pressures, play a critical role in promoting transparency in environmental disclosures. The originality of this study lies in its focus on the nuanced interplay between ownership structure and non-financial reporting, providing insights for policymakers, corporate managers, and investors on fostering sustainable business practices.

Keywords: institutional ownership, environmental reporting, corporate governance index, firm leverage, firm size