Institutional Investors and Corporate Environmental, Social, and Governance Policies: Evidence from Toxics Release Data

• 成果类型: Article
• 署名作者: Kim, Incheol; Wan, Hong; Wang, Bin; Yang, Tina
• 署名单位: University of Texas System; University of Texas Rio Grande Valley; State University of New York (SUNY) System; State University of New York (SUNY) - Oswego; Marquette University; Villanova University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2018.3055
• 发表日期: 2019
• 页码: 4901-4926
• 关键词: environmental; social; and governance; Corporate social responsibility; institutional investors; GEOGRAPHIC DISTANCE; TOXICS RELEASE INVENTORY

摘要

This paper studies the role of institutional investors in influencing corporate environmental, social, and governance (ESG) policies by analyzing the relation between institutional ownership and toxic release from facilities to which institutions are geographically proximate. We develop a local preference hypothesis based on the delegated philanthropy and transaction-costs theories. Consistent with the hypothesis, local institutional ownership is negatively related to facility toxic release. The negative relation is stronger for local socially responsible investing (SRI) funds, local public pension funds, and local dedicated institutions. We also find that the relation is more negative in communities that prefer more stringent environmental policies and in communities of greater collective cohesiveness. Local institutional ownership, particularly local ownerships by SRI funds and public pension funds, is positively related to the probability that an ESG proposal is either introduced or withdrawn. The paper sheds light on the drivers behind institutions' ESG engagement and their effectiveness in influencing ESG.