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The Nonlinear Relation between Institutional Ownership and Environmental, Social and Governance Performance in Emerging Countries

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  • Jennifer Martínez-Ferrero

    (Departamento Administración y Economía de la Empresa, Facultad de Economía y Empresa, Instituto Multidisciplinar de Empresa, Universidad de Salamanca, 37007 Salamanca, Spain)

  • María-Belén Lozano

    (Departamento Administración y Economía de la Empresa, Facultad de Economía y Empresa, Instituto Multidisciplinar de Empresa, Universidad de Salamanca, 37007 Salamanca, Spain)

Abstract

This paper examines how the level of institutional ownership affects environmental, social, and governance (ESG) performance in emerging countries by jointly investigating a nonlinear relationship. By examining an international sample composed of 17,318 firm–year observations from the period 2012–18 for 16 emerging countries, our findings reveal that the ESG performance of firms located in emerging countries depends on the level of influential institutional ownership, and displays a U-shaped relation, particularly for environmental disclosure. Institutional investors with low ownership are less likely to promote higher ESG performance in emerging countries, although this effect is attenuated when institutional ownership reaches a significant percentage, constituting a critical mass.

Suggested Citation

  • Jennifer Martínez-Ferrero & María-Belén Lozano, 2021. "The Nonlinear Relation between Institutional Ownership and Environmental, Social and Governance Performance in Emerging Countries," Sustainability, MDPI, vol. 13(3), pages 1-16, February.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:3:p:1586-:d:492031
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