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Share pledging and corporate environmental investment

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  • Li, Yukun
  • Zhu, Danfeng

Abstract

This paper examines the effect of share-pledging of controlling shareholder on corporate environmental investment. Using a sample of Chinese listed companies over the period 2010 – 2019, we find evidence that there is a negative relationship between share-pledging and corporate environmental investment. The above conclusion is still credible after a series of robustness tests. Further, we identify that the relationship is more pronounced in firms with more serious tunneling by controlling shareholder and the risk of share price collapse. Overall, the paper enriches the literature on corporate environmental governance effects of ownership structure and the research on economic consequences of share-pledging, which may be of interest to regulators in developing countries who are concerned with the long-term performance of corporate environmental governance.

Suggested Citation

  • Li, Yukun & Zhu, Danfeng, 2022. "Share pledging and corporate environmental investment," Finance Research Letters, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:finlet:v:50:y:2022:i:c:s1544612322005244
    DOI: 10.1016/j.frl.2022.103348
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    References listed on IDEAS

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    Cited by:

    1. Hong Chen & Haowen Zhu & Tianchen Sun & Xiangyu Chen & Tao Wang & Wenhong Li, 2023. "Does Environmental Regulation Promote Corporate Green Innovation? Empirical Evidence from Chinese Carbon Capture Companies," Sustainability, MDPI, vol. 15(2), pages 1-24, January.
    2. Jose, Amal & Bhaduri, Saumitra, 2024. "Promoter's share pledging and investment–The role of financial constraints," Finance Research Letters, Elsevier, vol. 62(PA).
    3. Tian, Zhongliang & Tang, Ruoyuan & Liu, Wenhe & Qi, Yuan, 2024. "Controlling shareholder's equity pledge and corporate financialization," Finance Research Letters, Elsevier, vol. 60(C).
    4. Bai, Keke & Jing, Kun & Li, Tianyu, 2024. "Corporate ESG Performance and Stock Pledge Risk," Finance Research Letters, Elsevier, vol. 60(C).
    5. Li, Shengnan & Zheng, Xinya & Niu, Jianbo & Ma, Xuan, 2024. "Share pledging of controlling shareholders and corporate social responsibility disclosure," Research in International Business and Finance, Elsevier, vol. 67(PA).
    6. Jingtai Wu & Xinyi Cai & Fei Zuo & Yue Dong, 2023. "Study on the Impact of Common Institutional Ownership on Corporate Green Transformation in the Context of “Dual Carbon”: Evidence from China," Sustainability, MDPI, vol. 15(15), pages 1-20, August.
    7. He, Mingfeng & Huang, Dengshi & Zhou, Jianan, 2023. "The impacts of share pledging on firm investment timing and valuation," International Review of Financial Analysis, Elsevier, vol. 87(C).
    8. Lu, Chao & Zhu, Tianqi & Xia, Xiaoxue & Zhao, Ziying & Zhao, Yiwen, 2024. "Common institutional ownership and corporate green investment: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 1123-1149.
    9. Chen, Yinghui & Tong, Ying & Zhou, Can, 2024. "Non-mandatory approaches to corporate environmental engagement: Insights from the Belt and Road Initiative," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1287-1301.

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