Institutional Investors’ Corporate Site Visits and Firms’ Sustainable Development

Yize Hu, Jun Shan and Peixun Zhan
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Yize Hu: School of Management, Jinan University, Guangzhou 510632, China
Jun Shan: School of Management, Jinan University, Guangzhou 510632, China
Peixun Zhan: School of Finance, Shanghai University of Finance and Economics, Shanghai 200433, China

Sustainability, 2020, vol. 12, issue 17, 1-17

Abstract: Institutional investors are essential stakeholders of the firm, and they care about firms’ sustainable development. In this study, we focused on a prevalent and essential type of information acquisition activity of institutional investors: corporate site visits, which refers to their trip to the firms’ headquarters and factories. We investigated the impact of institutional investors’ corporate site visits on firms’ likelihood of environmental violation. Using Chinese listed manufacturing firms in the Shenzhen Stock Exchange from 2009 to 2017, the econometric analysis shows that institutional investors’ corporate site visits significantly decrease firms’ likelihood of environmental violation. Moreover, this effect is more pronounced for firms in heavily polluting industries, firms not owned by the government, and firms with less institutional shareholding. Furthermore, we show that institutional investors’ corporate site visits prevent environmental violations by increasing firms’ environmental investment. Our study highlights the importance of institutional investors’ corporate site visits by showing that they are beneficial to the firms visited.

Keywords: manufacturing firms; environmental violation; institutional investors; corporate site visits; sustainable development (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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