Cao et al (2023)
Cao, Jie (Jay), Xintong (Eunice) Zhan, Weiming (Elaine) Zhang, and Yaojia (Zoe) Zhang. “Foreign Institutional Ownership and Corporate Carbon Emissions.” Working paper (The Hong Kong Polytechnic University), 2023.
From the authors’ abstract: “We document that foreign institutions reduce the carbon emissions of their investee companies. Using three exogenous shocks, we establish the causal relationship. We find that active engagement by foreign institutions drives the results. Specifically, firms with higher foreign institutional ownership have more green patents, proposals on environmental and social issues, and their executive compensation is more tightly linked to carbon emission levels. The effect of foreign institutional ownership on carbon emission levels is more pronounced among firms with foreign sales and is weakened by corporate financial constraints.”
lk comment: Strong paper - unusually large sample (11,379 firms / 2001-2020 time period) offers strong indirect evidence of the effectiveness of corporate engagement over time.