Watchful Eye or Just a Veil? Common Institutional Ownership and Environmental Information Disclosure Quality

Abstract

As an important channel for the external stakeholder to understand the environmental performance of enterprises, corporate environmental information disclosure is not only an effective way to exercise social supervision but also an important mechanism to promote corporate environmental governance. However, Under China’s current environmental information disclosure model, irregular disclosures, ambiguity, and selective disclosure practices remain prevalent. Hence, it is crucial to seek solutions to improve the quality of environmental information disclosure. In recent years, the phenomenon of common institutional ownership has become increasingly widespread in the capital markets and has a significant impact on the strategic decisions of companies. This paper selects Chinese A-share listed firms from 2010-2021 as a research sample to examine the impact of common institutional ownership on the quality of environmental information disclosure. The study found that common institutional ownership can improve the quality of environmental information disclosure. The higher the degree of their linkage and the greater the shareholding, the more pronounced the synergistic effect. The findings remained valid after testing using propensity score matching (PSM) and changing the sample period. Heterogeneity analysis shows that the facilitating effect of common institutional ownership on the quality of environmental information disclosure is more pronounced in high-polluting firms and firms which stay in the growth and maturity stage. This paper enriches the research on the economic consequences of common institutional ownership in China and provides management implications for improving the environmental information disclosure system and promoting “genuine green” corporate social responsibility.