Investment horizons and ESG decoupling: Distinct roles of long-term and short-term institutional investors

Yasser Eliwa and Mohamed E. Elmaghrabi

Economics Letters, 2025, vol. 247, issue C

Abstract: This paper examines how the investment horizon of institutional investors influences ESG decoupling (ESGD), using a sample of 36,055 firm-year observations from 41 countries over the period 2005 to 2023. Our findings reveal that long-term institutional investors significantly reduce ESGD, whereas short-term investors show no significant effect. This suggests that regulatory frameworks should incentivize long-term institutional ownership to enhance corporate accountability and promote more sustainable ESG practices.

Keywords: ESG decoupling; Investment horizon; Long-term institutional investors; Short-term institutional investors (search for similar items in EconPapers)
JEL-codes: G11 G23 M14 M41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:247:y:2025:i:c:s0165176525000448

DOI: 10.1016/j.econlet.2025.112207

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