Institutional Shareholders Research Articles

Factors Determining of Carbon Emissions Voluntary Disclosure in Indonesia’s Energy Sector Companies

Reporting information on carbon emission from company operations is a form of social and environmental responsibility that contributes to the reduction of greenhouse gas emissions to achieve the SDGs target by 2030. This carbon-related reporting is the role of accountants through carbon accounting as a form of transparency and accountability, as well as an effort to reduce GHGs emissions produced by companies. This research is intended to see how energy sector companies implement voluntary disclosure of carbon emissions with several determinants which is reflected in the company size scale, the exposure carried out by companies in the company’s website media, and shareholding owned by institutions. The research population is in energy sector companies listed on the Indonesia Stock Exchange (IDX) during 2018-2022. Samples of this research used purposive sampling, so that 50 observational data were obtained consisting of 10 energy sector companies in 5 years period. Result show that media exposure influences carbon emission disclosure. Companies that present media exposure have an increase in the carbon emission disclosure level. Meanwhile, firm size and institutional ownership have no influence on the carbon emission disclosure. A company with a large size scale and high institutional shareholding does not guarantee that it will report information of carbon emission thoroughly.

Information disclosure transparency and shareholder wealth: Based on textual analysis

Based on the textual analysis of A-share listed non-financial 2017–2022 annual reports, this paper investigates the shareholder wealth effect of annual report disclosure transparency. It is found that the improvement of annual report disclosure transparency has a good mitigating effect on the degree of information asymmetry between the company and the market, which in turn positively affects shareholders' wealth; it is further found that the above effect is more significant in firms with higher analysts' attention and a higher proportion of institutional shareholders.

Corporate governance, institutional ownership, and stock liquidity of SMEs: evidence from China

ABSTRACT This study explores the relationship between corporate governance and stock liquidity of Chinese small and medium-sized enterprises (SMEs). Our findings reveal a nonlinear (U-shaped) relationship between the overall quality of corporate governance and stock liquidity, implying that, unlike large-sized listed firms, SMEs cannot monotonically increase liquidity through improved corporate governance. After examining the sub-indicators individually, we find that the percentage of institutional shareholdings is the main driver of this U-shaped relationship. The nonlinear relationship between institutional shareholdings and stock liquidity suggests that continuously enhancing corporate governance may reduce stock liquidity, posing challenges for SMEs in securing financing.

Shareholders’ Monitoring and Online Disclosures of Minutes of Shareholders’ Meeting

Making detailed annual general meeting (AGM) minutes available online allows absentee investors to understand the discussion that took place during the AGM, and other interested parties to gauge the intensity of investor activism and stakeholder engagement from the questions posed. This paper investigated the effects of shareholders’ monitoring through the Minority Shareholders Watch Group (MSWG), the Employees Provident Fund (EPF), and other government-linked institutions on corporate communication via minutes of shareholders’ meeting. This study also incorporated firm size, audit quality, profitability, and grey directors as control variables. Based on a sample of 261 listed firms with financial year ended 31 December 2016 who held their AGMs in 2017, the findings showed that shareholders’ monitoring through the MSWG, EPF, and other government- linked institutions were significant and positively associated with corporate transparency. This implies that minority and institutional shareholders’ activism can be the advocate in pushing for dissemination of online corporate disclosure to enhance the information environment, in align with agency theory.

Monitoring Intensity, Institutional Shareholders, and Earnings Manipulation Engendered Accounting Scandal: The South African Perspective

This study determines the extent to which loosening institutional shareholder monitoring intensity induces earnings management, thereby leading to accounting scandals. When there is intense monitoring of the corporate executives, their opportunistic tendencies are prevented, and corporate decisions align with the value-creation target. The study postulates that institutional shareholders' relaxed monitoring role positively and significantly impacts earnings management. The more robust Two-Step System GMM was used to analyse the collected data of companies listed on the Johannesburg Stock Exchange (JSE) for 15 years from 2004 to 2019. The finding revealed that slack institutional shareholders' control affects earnings management positively.

Determinant Factors of Cyber Security Disclosure: A Systematic Literature Review

Cyber security disclosures as risk factor disclosures are particularly important. The importance of cyber security disclosure decisions is intensified by a significant number of data breaches that occur throughout the year raising serious concerns about corporate cyber security programs. Costs of data breaches can be significant. On the other hand, research on cyber security disclosure is still rare. This study aims to identify the factors that influence cyber security disclosures. Articles from various international journals were reviewed. Literature review was conducted to find determinant factors that determine cyber security disclosures. The results show that the determinant factors of cyber security disclosures are cyber security breach/previous cyber incidents, peer breach, public attention, WFH, board size, board independence, board gender diversity, institutional shareholders, foreign shareholders, capital expenditure, intangible asset, firm’s size, firm’s growth, firm’s leverage, firm’s profitability, firm’s loss, industry, guidance, technology committee, and executive change. Based on the literature review, the authors provide suggestions for future research. This research contributes by providing a comprehensive discussion of the determinant factors of cybersecurity disclosure from various studies. The limitation of this study is that the authors only reviewed articles published in English. Future research must include articles published in multiple languages. Keywords: cyber, cybersecurity, disclosure, cybersecurity disclosure, determinants

THE EFFECTS OF LOCAL SHAREHOLDERS ON FIRM PERFORMANCE: EVIDENCE FROM CORPORATE SOCIAL RESPONSIBILITY

This paper shows that local institutional shareholders tend to improve firm performance through corporate social investments. Using an extensive U.S. mutual fund-firm dataset, we find that local mutual funds tend to promote corporate social responsibility (CSR). In addition, the social investments are positively associated with firm performance. Finally, it is evident that CSR mediates the relation between local ownership and firm performance. Consistent with instrumental stakeholder theory, our findings suggest that local shareholders help firms develop reputational and relationship capital through CSR and lead to higher firm performance.

DISCLOSURE OF SUSTAINABILITY REPORT LEGITIMACY THEORY PERSPECTIVE

This study aims to empirically ascertain how the Sustainability Report is influenced by company size, profitability, audit committee, and institutional shareholding. Sustainability Report internal and external responsibility of stakeholders to the performance of the organization in achieving sustainable development goals. This study determines the population of companies included in the List of Rating – Asia Sustainability Reporting Rating (ASRRAT) awards in 2022. Purposive sampling was used for the sampling process, resulting in 11 companies and 44 observations in total. Testing research results using multiple linear regression, classical assumption testing, descriptive statistical analysis, and hypothesis testing are all part of the data analysis approach. The findings show how the disclosure of the Sustainability Report is positively influenced by company size, profitability, audit committee, and institutional shareholding.

Multiple large shareholders, earnings management, and operating risk: Empirical evidence from China

This study uses the annual financial data of Chinese A-share listed firms from 2010 to 2020 to investigate the relationship between multiple large shareholders (MLS) and earnings management (EM). After analyzing the samples using the Ordinary Least Squares (OLS) model and endogenous switching regression (ESR) model, the empirical results show that the presence of MLS can increase corporate EM activities and the MLS have a significantly positive effect on EM in both the treatment and control groups. In addition, this conclusion still holds after conducting multiple robustness tests. The cross-section analysis shows that the external audit supervision quality, institutional shareholders, and the uncertainty of the external economic environment have significant impacts on the baseline model results. Lastly, mediation effect analysis shows that the presence of MLS increases the corporate operating risk through EM activities. The conclusions of this paper are critical for policymakers to supervise China’s capital market, improve the level of corporate governance of China’s listed firms, and further promote reform of ownership structure.

Responsible investment: Institutional shareholders and ESG performance

This study examines the impact of institutional investors on firms' environmental, social, and governance (ESG) performance and the possible channels through which this impact occurs. Using a large, balanced set of panel data from 3881 companies in China from 2009 to 2021, we uncover the following significant associations. (i) A positive relationship exists between institutional investors and ESG performance, which holds after considering potential endogeneity problems and conducting a series of robustness tests. (ii) Specifically, institutional investors affect firms' ESG performance by enhancing their ESG strengths, improving their ESG weaknesses, and encouraging them to be more green. (iii) Institutional investors also influence firms' ESG performance positively through voicing and exit threats, although they may have a negative influence in the presence of collusion; however, we find no support for the soft activism mechanism by site visiting. (iv) The positive effect of institutional investors on ESG performance is more pronounced for stable and independent institutional investors, firms whose industries are not heavy polluters, and firms with worse corporate governance than for their counterparts. (v) Finally, financial returns motivate institutional investors to improve firms' ESG performance.

Do foreign institutional shareholders affect international debt contracting? Evidence from Yankee bond covenants

Do foreign institutional shareholders affect international debt contracting? Evidence from Yankee bond covenants

Does Antitakeover Provision Harm Shareholders? Indexing for Antitakeover Provisions in China

Abstract Does antitakeover harm shareholders? Encumbered by a multitude of theoretical perspectives, the legality of antitakeover remains a shared intellectual inquiry that the A-share market has yet to fully address. This paper constructs a governance index for the A-share market based on a manually collected and hand-coded research dataset (C-index). This dataset, comprising 4251 historical firm-level profiles of Antitakeover Provisions (ATPs), is meticulously sampled from companies listed in China from 2001 to 2017. The study investigates the logical correlation between antitakeover strength, financial performance, and the governance attributes of the company by leveraging the index’s economic utility. Additionally, this paper explores the firm-level factors that prompt corporate directors to integrate ATPs. From an empirical standpoint, it provides evidence that the governance index of firm-level strength of ATPs is positively correlated with share liquidity, institutional shareholding, private ownership, and the company’s commitment to achieving specific financial performance.

Supervision of not-for-profit minority institutional shareholder and the cost of equity: Evidence from a quasi-natural experiment

Based on the quasi-natural experiment of the shareholding pilot program of China Securities Investor Services Center (CSISC), we construct a difference-in-differences model and find that CSISC shareholding reduces the cost of equity. Channel analyses confirm that CSISC shareholding reduces the cost of equity through optimizing information environment and enhancing stock liquidity. This positive effect is more salient in firms with weaker internal and external governance supervision. Our study has important implications for policy makers to improve investor protection, especially in emerging markets with weak institutional environment.

Can the improvement of the social credit environment enhance corporate ESG scores?

The ESG scores of corporations is a crucial manifestation of their long-term strategic goals, attracting significant attention from society. The impact and underlying mechanisms of the enhancement of the social credit atmosphere on the ESG performance of corporations remain unclear. This study utilizes a sample of Chinese A-share listed companies from 2010 to 2020, employing the Difference-in-Differences (DID) methodology to investigate the relationship of the establishment of the social credit system on company ESG scores. This study reveals that the establishment of the social credit system significantly advances corporate ESG scores. Heterogeneity results indicate that the positive effect is more pronounced in state-owned enterprises or companies having substantial institutional shareholding. Furthermore, the implementation of the social credit system amplifies corporate ESG scores through three key mechanisms: fostering green technology innovation, cultivating ethical and moral corporate cultures, and optimizing the overall business environment. This paper enriches the informal institutional researches about the driving factors of corporate ESG scores, providing valuable insights for policymakers and corporate decision-makers.

Tax incentives, common institutional ownership, and corporate ESG performance

AbstractAgainst the backdrop of sustainable development, enterprises, the general public, and regulatory bodies are exhibiting an escalating level of concern regarding the performance in environmental stewardship, social responsibility, and corporate governance collectively referred to as ESG (Environmental, Social Responsibility, and Corporate Governance). This research, from the vantage point of external fiscal policy, investigates the examination of the impact of tax incentives on corporate ESG performance. Drawing upon panel data spanning from 2010 to 2021 at the level of China's A‐share listed companies and grounded in the context of accelerated depreciation policy for fixed assets, this study commitment to both identify and empirically test the presence of a significant positive correlation between tax incentives and corporate ESG performance. Our analysis of the financial mechanism and the Research and Development (R&D) mechanism reveals that tax incentives are instrumental in alleviating the financing constraints faced by corporations, thereby augmenting their financial performance. Furthermore, they serve to intensify R&D efforts, thereby fostering the generation of green innovations. In conclusion, our findings underscore that tax incentive policies significantly enhance the ESG performance of enterprises with common institutional shareholdings, an effect attributed to the presence of governance and synergy effects.

The impact of ESG performance on firms’ technological innovation: evidence from China

Technological innovation is crucial for creating sustainable corporate value and shaping competitive advantage in the market. ESG, as an indicator of corporate value practices, plays a significant role in enterprise technological innovation. However, there is little empirical evidence to support this claim. This study analyzes the relationship between ESG performance and technological innovation in Chinese A-share listed enterprises from 2011 to 2021. The statistical data shows that strong ESG performance has a significant positive impact on corporate technological innovation. ESG performance can promote corporate technological innovation through external mechanisms, such as enhancing corporate network location and increasing institutional shareholding. Additionally, internal mechanisms, such as reducing labor costs and easing financing constraints, can also promote corporate technological innovation. The impact of ESG performance on corporations exhibits heterogeneity, with ESG performance promoting innovation more strongly among labor-intensive firms, non-state-owned firms, highly competitive industries, and mature firms. Based on the study results, it is recommended that enterprises actively practice ESG development concepts, optimize their equity structure, strengthen information communication with stakeholders, and alleviate problems such as information asymmetry to improve their technological innovation. The government should focus on enterprise characteristics, improve ESG development policies, and promote enterprise innovation through ESG performance.

Not all faultlines are created equal: The heterogeneous impact of TMT faultlines on a firm's ESG disclosure

AbstractDriven by the theory of sustainable development, Chinese firms have gradually realized the importance of ESG disclosure. Executives play a core role in ESG decision‐making, but whether and how top management team (TMT) faultlines affect ESG disclosure has yet to be systematically discussed. Based on the attention‐based view and faultline theory, we select 6456 observations of 910 Chinese A‐share listed firms from 2012 to 2021 as the research object to empirically test the above critical practical issues that have not been fully answered. We find that TMT information‐based faultlines improve firms' ESG disclosure, but TMT social category faultlines reduce firms' ESG disclosure. In addition, the internal mechanism test showed that the TMT's future‐oriented attention plays a mediating role in the above relationship. Finally, we also find that institutional shareholding enhances the positive impact of the TMT's future‐oriented attention on ESG disclosure. This study enriches the literature on TMT faultlines and ESG disclosure, demonstrating that the composition of the TMT and its attention allocation are important factors for promoting firms' ESG disclosure. The conclusions of this study can help firms strengthen their ESG disclosure by building efficient TMTs and provide important implications for firms to better fulfill their ESG responsibilities.

Corporate Governance and Sustainability Reporting: A Study of Listed Pharmaceutical Companies in India

The main objective is to depict the magnitude of Sustainability Reporting in ten selected BSE-listed Pharmaceutical Companies in India. The data analysis period from 2018–19 to 2022–23. The information was gathered from selected companies’ annual reports. Moreover, researchers used a multiple regression model to know the influences of the independent variables on the dependent variable. The hypothesis was found statistically significant for board size, board independence, promoter shareholdings, foreign shareholding, and institutional shareholdings. The remaining variables were insignificant. It indicates that good attributes of Corporate Governance minimize market information asymmetry and provide valuable information to the stakeholders. This research is important for policymakers and management to examine these companies’ disclosure strategies and trends.

The moderating impact of institutional shareholders on the relationship between audit quality and firm value

The moderating impact of institutional shareholders on the relationship between audit quality and firm value

Window Dressing in Impression Management: Does Negative Media Coverage Drive Corporate Green Production?

This study addresses the calls for research attention on corporate greenwashing and analyzes an environmental strategy in corporate impression management. We assume that negative media coverage triggers impression motivation and causes firms to adopt environmental strategies for impression construction based on the two-component model in impression management. Specifically, firms release credible signals, such as green investment, to cover concealed pollution emissions under the framework of a game with incomplete information. We posit that firms can select a window-dressing strategy under the pressures of negative media coverage by constructing two regression models, respectively. We also assess our underlying assumption of constraints from state ownership and institutional shareholdings by testing additional moderating relationships. Utilizing a sample of Chinese publicly listed firms from 2000 to 2010, our empirical results suggest that negative media coverage increases corporate green investment, but pollutant emissions are reduced correspondingly, and state ownership aggravates corporate window dressing while institutional shareholdings curb it. Our findings reveal the corporate social irresponsibility in environmental protection and sustainable development, and they offer important implications for firm stakeholders.