Do foreign institutional investors curb carbon emissions? Evidence from an emerging economy
Journal
Research in International Business and Finance
Journal Volume
74
Start Page
102665
ISSN
0275-5319
Date Issued
2025-02
Author(s)
Abstract
This study examines the effect of foreign institutional investors on corporate carbon emissions of Chinese listed firms from 2010 to 2019. Our findings support the monitoring view of foreign institutional ownership and find that foreign institutional investors have a negative effect on corporate carbon emissions. Our results remain robust to a battery of endogeneity tests, including the instrumental regression model, the Heckman selection model, and the PSM-DID (propensity score matching and difference-in-differences) method. Moreover, we find that foreign institutional investors from regions with strong green innovation exert a more substantial negative impact. Further analyses show that the negative effects are more significant for firms with agency problems and information asymmetry. Our research highlights the critical role that foreign institutional investors play in addressing environmental issues in emerging economies and provides valuable insights into this phenomenon.
Subjects
China
Corporate carbon emissions
Emerging economies
Foreign institutional investors
SDGs
Publisher
Elsevier BV
Type
journal article