TY - JOUR

T1 - Foreign Institutional Investors, Legal Origin, and Corporate Greenhouse Gas Emissions Disclosure

AU - Döring, Simon

AU - Drobetz, Wolfgang

AU - El Ghoul, Sadok

AU - Guedhami, Omrane

AU - Schröder, Henning

N1 - Publisher Copyright: © 2023, The Author(s), under exclusive licence to Springer Nature B.V.

PY - 2023/2/1

Y1 - 2023/2/1

N2 - The disclosure of corporate environmental performance is an increasingly important element of a firm’s ethical behavior. We analyze how the legal origin of foreign institutional investors affects a firm’s voluntary greenhouse gas emissions disclosure. Using a large sample of firms from 36 countries, we show that foreign institutional ownership from civil law countries improves the scope and quality of a firm’s greenhouse gas emissions reporting. This relation is robust to addressing endogeneity and selection biases. The effect is more pronounced in firms from non-climate-sensitized countries, for which the gap between firms’ environmental standards and investors’ environmental targets is potentially larger, and in less international firms. Firms with a higher level of voluntary greenhouse gas emissions disclosure also exhibit higher valuations.

AB - The disclosure of corporate environmental performance is an increasingly important element of a firm’s ethical behavior. We analyze how the legal origin of foreign institutional investors affects a firm’s voluntary greenhouse gas emissions disclosure. Using a large sample of firms from 36 countries, we show that foreign institutional ownership from civil law countries improves the scope and quality of a firm’s greenhouse gas emissions reporting. This relation is robust to addressing endogeneity and selection biases. The effect is more pronounced in firms from non-climate-sensitized countries, for which the gap between firms’ environmental standards and investors’ environmental targets is potentially larger, and in less international firms. Firms with a higher level of voluntary greenhouse gas emissions disclosure also exhibit higher valuations.

KW - Corporate environmental responsibility

KW - Firm value

KW - Foreign ownership

KW - Greenhouse gas emissions disclosure

KW - Institutional investors

KW - Legal origin

KW - Management studies

UR - http://www.scopus.com/inward/record.url?scp=85146720545&partnerID=8YFLogxK

U2 - 10.1007/s10551-022-05289-6

DO - 10.1007/s10551-022-05289-6

M3 - Journal articles

AN - SCOPUS:85146720545

VL - 182

SP - 903

EP - 932

JO - Journal of Business Ethics

JF - Journal of Business Ethics

SN - 0167-4544

IS - 4

ER -