Financial system

Linguistics

Institutional theory

Philosophy

Economic system

Social psychology

China

Accounting

Archaeology

Economics

Market economy

Marketization

Business

Corporate governance

Psychology

Politics

Management

Geography

Political science

Monetary economics

Institutional investor

Finance

Investment (military)

Positive relationship

Affect (linguistics)

Finance research letters

This paper examines whether institutional investors affect the environment, social, and governance (ESG) performance of Chinese-listed companies. We show that institutional ownership is significantly and positively related to corporate ESG performance. We further classify institutional investors into four different types, based on investment horizons and business relationships, and find that the positive relationship between institutional ownership and ESG performance is mainly driven by long-term pressure-insensitive institutional investors and short-term pressure-sensitive institutional investors. Further evidence suggests that such an association is especially evident among firms in regions with high levels of economic development and marketization.

Institutional ownership heterogeneity and ESG performance: Evidence from China