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Institutional investor heterogeneity and green innovation in China: Does digital transformation matter?

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  • Shi, Xuanyi
  • Lin, Yongjia
  • Wang, Yizhi

Abstract

This paper examines how different categories of institutional investors influence green innovation for Chinese-listed companies and investigates the impact of digital transformation on this relationship. Results show that pressure-insensitive investors significantly improve corporate green innovation, while pressure-sensitive institutions have no effect. Further evidence suggests this is due to the negative impact of long-term pressure-sensitive investors on green innovation. We further analyze whether digital transformation affects the relationship between institutional ownership heterogeneity and green innovation. Consistent with the view that digital transformation promotes timely information dissemination and alleviates information asymmetry, our findings demonstrate that both pressure-insensitive institutional investors and short-term pressure-sensitive institutional investors promote green innovation in firms with higher levels of digital transformation. Further analyses reveal that digital transformation at the city level amplifies the influence of institutional investors on green innovation, and the underlying technology architecture provides more value to the institutional ownership heterogeneity−green innovation nexus.

Suggested Citation

  • Shi, Xuanyi & Lin, Yongjia & Wang, Yizhi, 2024. "Institutional investor heterogeneity and green innovation in China: Does digital transformation matter?," International Review of Economics & Finance, Elsevier, vol. 93(PB), pages 994-1014.
    • Handle: RePEc:eee:reveco:v:93:y:2024:i:pb:p:994-1014
    DOI: 10.1016/j.iref.2024.05.007
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    Keywords

    Institutional investor heterogeneity; Green innovation; Digital transformation;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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