Do Institutional Cross‐Owners Obstruct Corporate Environmental Information Disclosure? Evidence From China

Xin Cui, John W. Goodell, Jing Liao, Shouyu Yao and Xutang Liu

Journal of Business Finance & Accounting, 2025, vol. 52, issue 4, 1925-1955

Abstract: This study examines the impact of common institutional ownership (CIO) on environmental information disclosure (EID) within China's unique institutional context. We find that CIO significantly reduces EID in portfolio firms. To address potential endogeneity issues, we employ alternative measures, fixed effects models, entropy balancing, and instrumental variable estimation. Mechanism analysis reveals that the negative impact of CIO on EID is primarily driven by their better access to and preference for private information, as well as concerns about litigation risks. Furthermore, this negative effect is less pronounced in heavily polluting industries, firms participating in mandatory disclosure pilot programs, regions with higher local government attention to environmental issues, and firms with greater QFII ownership. We also investigate the role of state‐owned CIO in influencing EID and find that their negative impact is only significant in privately owned firms, not in state‐owned enterprises (SOEs). Additionally, the influence of state‐owned CIO weakens over time as government attention to corporate environmental information intensifies. These findings highlight the positive role of regulatory and governmental efforts in promoting EID.

Date: 2025
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