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Institutional Investors’ Corporate Site Visits and Firms’ Sustainable Development

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  • Yize Hu

    (School of Management, Jinan University, Guangzhou 510632, China)

  • Jun Shan

    (School of Management, Jinan University, Guangzhou 510632, China)

  • Peixun Zhan

    (School of Finance, Shanghai University of Finance and Economics, Shanghai 200433, China)

Abstract

Institutional investors are essential stakeholders of the firm, and they care about firms’ sustainable development. In this study, we focused on a prevalent and essential type of information acquisition activity of institutional investors: corporate site visits, which refers to their trip to the firms’ headquarters and factories. We investigated the impact of institutional investors’ corporate site visits on firms’ likelihood of environmental violation. Using Chinese listed manufacturing firms in the Shenzhen Stock Exchange from 2009 to 2017, the econometric analysis shows that institutional investors’ corporate site visits significantly decrease firms’ likelihood of environmental violation. Moreover, this effect is more pronounced for firms in heavily polluting industries, firms not owned by the government, and firms with less institutional shareholding. Furthermore, we show that institutional investors’ corporate site visits prevent environmental violations by increasing firms’ environmental investment. Our study highlights the importance of institutional investors’ corporate site visits by showing that they are beneficial to the firms visited.

Suggested Citation

  • Yize Hu & Jun Shan & Peixun Zhan, 2020. "Institutional Investors’ Corporate Site Visits and Firms’ Sustainable Development," Sustainability, MDPI, vol. 12(17), pages 1-17, August.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:17:p:7036-:d:405722
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    Cited by:

    1. Jing Lu & Guohua Cao & Chuan Lin & Stavros Sindakis & Saloome Showkat, 2024. "Corporate Site Visits and Stock Price Crash Risk: The Role of Institutional Investors’ Knowledge Acquisitions," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 9082-9114, June.
    2. Prisca Ayassamy, 2024. "The Relationship between Biodiversity, Circular Economy, and Institutional Investors in the Sustainable Transition: A Mixed Review," Circular Economy and Sustainability, Springer, vol. 4(4), pages 3171-3182, December.
    3. Wang, Yang & Zhang, Yifei & Kang, Wei & Ahmed, Ahmed Hassan, 2022. "Female analysts and COVID-19 corporate donation," Emerging Markets Review, Elsevier, vol. 53(C).
    4. Zoltán Csedő & József Magyari & Máté Zavarkó, 2022. "Dynamic Corporate Governance, Innovation, and Sustainability: Post-COVID Period," Sustainability, MDPI, vol. 14(6), pages 1-21, March.
    5. Jiang, Yahan & Wang, Cai & Li, Sha & Wan, Jing, 2022. "Do institutional investors' corporate site visits improve ESG performance? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 76(C).

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