IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-04435468.html
   My bibliography  Save this paper

Institutional Ownership and Greenhouse Gas Emissions: A Comparative Study of the UK and the USA

Author

Listed:
  • Mohammed Benlemlih

    (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie)

  • M. Arif
  • M. Nadeem

Abstract

Motivated by the growing attention on climate change and the ethical role that board characteristics and ownership may play in reducing greenhouse gas (GHG) emissions, this paper investigates the relationship between institutional ownership and GHG emissions. Using an extensive dataset from the UK and the USA, we show that institutional ownership is associated with less GHG emissions \textendash a one standard deviation increase in the proportion of institutional ownership reduces carbon emissions by 1.02 metric tons. Our findings are robust when using alternative measures, econometric specifications and several approaches to address endogeneity. Further, we find no evidence for a stronger effect in the UK compared with the USA, as expected from our discussion of the governance contexts in the two countries. We also test the possible channel (i.e. exit and selection) through which institutional investors affect GHG emissions. In a set of additional analyses, we show that litigation risk and board gender diversity moderate the relationship between institutional ownership and GHG emissions. Finally, we also document a positive effect of the stewardship codes on the relationship between institutional ownership and GHG emissions. Our findings make significant theoretical and regulatory contributions. \textcopyright 2022 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management.

Suggested Citation

  • Mohammed Benlemlih & M. Arif & M. Nadeem, 2023. "Institutional Ownership and Greenhouse Gas Emissions: A Comparative Study of the UK and the USA," Post-Print hal-04435468, HAL.
    • Handle: RePEc:hal:journl:hal-04435468
    DOI: 10.1111/1467-8551.12613
    Note: View the original document on HAL open archive server: https://normandie-univ.hal.science/hal-04435468
    as

    Download full text from publisher

    File URL: https://normandie-univ.hal.science/hal-04435468/document
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-8551.12613?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Douenne, Thomas & Fabre, Adrien, 2020. "French attitudes on climate change, carbon taxation and other climate policies," Ecological Economics, Elsevier, vol. 169(C).
    2. Ruth V. Aguilera & Cynthia A. Williams & John M. Conley & Deborah E. Rupp, 2006. "Corporate Governance and Social Responsibility: a comparative analysis of the UK and the US," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(3), pages 147-158, May.
    3. Martin J. Conyon & John E. Core & Wayne R. Guay, 2011. "Are U.S. CEOs Paid More Than U.K. CEOs? Inferences from Risk-adjusted Pay," The Review of Financial Studies, Society for Financial Studies, vol. 24(2), pages 402-438.
    4. Sadok El Ghoul & Omrane Guedhami & Hakkon Kim & Kwangwoo Park, 2018. "Corporate Environmental Responsibility and the Cost of Capital: International Evidence," Journal of Business Ethics, Springer, vol. 149(2), pages 335-361, May.
    5. McDonnell, Mary-Hunter & King, Brayden & Soule, Sarah A., 2015. "A Dynamic Process Model of Private Politics: Activist Targeting and Corporate Receptivity to Social Challenges," Research Papers 3319, Stanford University, Graduate School of Business.
    6. Ernest Gyapong & Ammad Ahmed & Collins G Ntim & Muhammad Nadeem, 2021. "Board gender diversity and dividend policy in Australian listed firms: the effect of ownership concentration," Asia Pacific Journal of Management, Springer, vol. 38(2), pages 603-643, June.
    7. Mohammed Benlemlih & Jamil Jaballah & Jonathan Peillex, 2018. "Does it really pay to do better? Exploring the financial effects of changes in CSR ratings," Applied Economics, Taylor & Francis Journals, vol. 50(51), pages 5464-5482, November.
    8. Eng Cheah & Wen Chan & Corinne Chieng, 2007. "The Corporate Social Responsibility of Pharmaceutical Product Recalls: An Empirical Examination of U.S. and U.K. Markets," Journal of Business Ethics, Springer, vol. 76(4), pages 427-449, December.
    9. Pieter Jan Trinks & Bert Scholtens, 2017. "The Opportunity Cost of Negative Screening in Socially Responsible Investing," Journal of Business Ethics, Springer, vol. 140(2), pages 193-208, January.
    10. Ching-Hsun Chang, 2011. "The Influence of Corporate Environmental Ethics on Competitive Advantage: The Mediation Role of Green Innovation," Journal of Business Ethics, Springer, vol. 104(3), pages 361-370, December.
    11. M. Benlemlih & J. Jaballah & Jonathan Peillex, 2018. "Does It Really Pay to Do Better? Exploring the Financial Effects of Changes in CSR Ratings," Post-Print hal-03680601, HAL.
    12. Muhammad Nadeem & Stephen Bahadar & Ammar Ali Gull & Umer Iqbal, 2020. "Are women eco‐friendly? Board gender diversity and environmental innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3146-3161, December.
    13. Paul A. Griffin & David H. Lont & Estelle Y. Sun, 2017. "The Relevance to Investors of Greenhouse Gas Emission Disclosures," Contemporary Accounting Research, John Wiley & Sons, vol. 34(2), pages 1265-1297, June.
    14. Gary Peters & Andrea Romi, 2014. "Does the Voluntary Adoption of Corporate Governance Mechanisms Improve Environmental Risk Disclosures? Evidence from Greenhouse Gas Emission Accounting," Journal of Business Ethics, Springer, vol. 125(4), pages 637-666, December.
    15. Paul C. Godfrey & Craig B. Merrill & Jared M. Hansen, 2009. "The relationship between corporate social responsibility and shareholder value: an empirical test of the risk management hypothesis," Strategic Management Journal, Wiley Blackwell, vol. 30(4), pages 425-445, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anjali Kaimal & Shigufta Hena Uzma, 2024. "CSR and ownership structure: Moderating role of board characteristics in an emerging country context," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4933-4955, September.
    2. Kentaro Azuma & Akira Higashida, 2024. "Climate change disclosure and evolving institutional investor salience: Roles of the Principles for Responsible Investment," Business Strategy and the Environment, Wiley Blackwell, vol. 33(4), pages 3669-3686, May.
    3. Dewan Muktadir‐Al‐Mukit & Firoz Haroon Bhaiyat, 2024. "Impact of corporate governance diversity on carbon emission under environmental policy via the mandatory nonfinancial reporting regulation," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 1397-1417, February.
    4. Gull, Ammar Ali & Carvajal, Mariela & Atif, Muhammad & Nadeem, Muhammad, 2024. "The presence and composition of sustainability committee and waste management practices," International Review of Financial Analysis, Elsevier, vol. 93(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Al-Fakir Al Rabab’a, Eltayyeb & Rashid, Afzalur & Shams, Syed & Bose, Sudipta, 2024. "Corporate carbon performance and firm risk: Evidence from Asia-Pacific countries," Journal of Contemporary Accounting and Economics, Elsevier, vol. 20(2).
    2. Naciye Sekerci & Jamil Jaballah & Marc van Essen & Nadine Kammerlander, 2022. "Investors’ Reactions to CSR News in Family Versus Nonfamily Firms: A Study on Signal (In)credibility," Entrepreneurship Theory and Practice, , vol. 46(1), pages 82-116, January.
    3. Becchetti, Leonardo & Cucinelli, Doriana & Ielasi, Federica & Rossolini, Monica, 2023. "Corporate social irresponsibility: The relationship between ESG misconduct and the cost of equity," International Review of Financial Analysis, Elsevier, vol. 89(C).
    4. Kong, Dongmin & Shi, Lu & Yang, Zhiqing, 2019. "Product recalls, corporate social responsibility, and firm value: Evidence from the Chinese food industry," Food Policy, Elsevier, vol. 83(C), pages 60-69.
    5. Giovanni Catello Landi & Francesca Iandolo & Antonio Renzi & Andrea Rey, 2022. "Embedding sustainability in risk management: The impact of environmental, social, and governance ratings on corporate financial risk," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 1096-1107, July.
    6. Aono, Kohei & Okimoto, Tatsuyoshi, 2023. "When does the Japan Empowering Women Index outperform its parent and the ESG Select Leaders Indexes?," International Review of Financial Analysis, Elsevier, vol. 85(C).
    7. Le Luo & Qingliang Tang, 2021. "Corporate governance and carbon performance: role of carbon strategy and awareness of climate risk," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(2), pages 2891-2934, June.
    8. Monica Singhania & Dimple Gupta, 2024. "Impact of Environmental, Social and Governance (ESG) disclosure on firm risk: A meta‐analytical review," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3573-3613, July.
    9. Jonathan Peillex & Sabri Boubaker & Breeda Comyns, 2021. "Does It Pay to Invest in Japanese Women? Evidence from the MSCI Japan Empowering Women Index," Journal of Business Ethics, Springer, vol. 170(3), pages 595-613, May.
    10. Caroline Flammer & Michael W. Toffel & Kala Viswanathan, 2021. "Shareholder activism and firms' voluntary disclosure of climate change risks," Strategic Management Journal, Wiley Blackwell, vol. 42(10), pages 1850-1879, October.
    11. Ishmael Tingbani & Lyton Chithambo & Venancio Tauringana & Nikolaos Papanikolaou, 2020. "Board gender diversity, environmental committee and greenhouse gas voluntary disclosures," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2194-2210, September.
    12. Driss, Hamdi & Drobetz, Wolfgang & El Ghoul, Sadok & Guedhami, Omrane, 2024. "The Sustainability committee and environmental disclosure: International evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 221(C), pages 602-625.
    13. Alexandra Huang, 2019. "Déterminants des encours nationaux socialement responsables : Une analyse exploratoire internationale," Working Papers hal-02242796, HAL.
    14. Dewan Muktadir‐Al‐Mukit & Firoz Haroon Bhaiyat, 2024. "Impact of corporate governance diversity on carbon emission under environmental policy via the mandatory nonfinancial reporting regulation," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 1397-1417, February.
    15. Narula, Radhika & Rao, Purnima & Kumar, Satish & Matta, Rahul, 2024. "ESG scores and firm performance- evidence from emerging market," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 1170-1184.
    16. Al Ayoubi, Khalil & Enjolras, Geoffroy, 2022. "Does disinvestment from fossil fuels reduce the financial performance of responsible sovereign wealth funds?," Journal of Multinational Financial Management, Elsevier, vol. 64(C).
    17. Alfred Z. Liu & Angela Xia Liu & Sangkil Moon & Donald Siegel, 2024. "Does Corporate Social Responsibility Always Result in More Ethical Decision-Making? Evidence from Product Recall Remediation," Journal of Business Ethics, Springer, vol. 191(3), pages 443-463, May.
    18. Benjamin Lynch & Martha O'Hagan‐Luff, 2024. "Relative corporate social performance and cost of equity capital: International evidence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 2882-2910, July.
    19. Shih, Yi-Cheng & Wang, Yao & Zhong, Rui & Ma, Yi-Ming, 2021. "Corporate environmental responsibility and default risk: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    20. Zheng, Zhigang & Li, Jiarong & Ren, Xingzi & Guo, Jie Michael, 2023. "Does corporate ESG create value? New evidence from M&As in China," Pacific-Basin Finance Journal, Elsevier, vol. 77(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-04435468. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.