Institutional Investors,disclosure Quality Of Environmental Information And Corporate Value

It is increasingly frequent that serious pollution incidents are taking place among C hina’s listed companies, especially those companies that are rooted in badly polluted in dustries. These incidents not only cause severe damage to the ecological environment, but also exert a negative impact on the reputation and management of listed companies, which would ultimately affect the value of enterprises. Although the Government has pr esented a series of policy that means to enhance the disclosure quality of environmental information, while the result is unfavorable. It is surveyed that the enterprise value incr eases with the rise of quality in disclosing environmental information, which is an essen tial part of social responsibility information. It is therefore of theoretical and practical si gnificance to study the improvement of corporate value by lifting the disclosure quality of environmental information.Currently, institutional investors, important participants in China’s capital markets, are rapidly developed. Studies have shown that institutional investors are informed trade r, which have greater advantages over other investors. To some extent, interpretation of environmental information by institutional investors can be transmitted into the changes of stock price. It would increase the information content of stock price, influence the di sclosure quality of environmental information, and thereby affect the the efficiency of th e capital market. This paper sets out to discuss the relationship among institutional inves tors, disclosure quality of environmental information and corporate value. In particular, it mainly includes the value effect of institutional investors on enterprises’ disclosure qu ality of environmental information, and the effect of institutional investors among com panies’ the top ten shareholders on both parties.This paper, based on existing literature of international scholars, conducts both the oretical and practical analysis of the relationship among institutional investors, disclosur e quality of environmental information and corporate value. Furthermore, it discusses th e effect of disclosure quality of environmental information on corporate value from both perspectives of equity capital cost and expected cash flow, and the effect of institutional investors on the relationship between disclosure quality of environmental information and corporate value. Analysis is implemented depended on the sample data from 510 lis ted companies that are engaged in the badly polluted industry in both Shanghai and She nzhen stock market. The relationship between disclosure quality of environmental infor mation and corporate value, and the effect of institutional investors’ existence and part icipation on the relationship above are respectively examined.It is shown that the corporate value can be enhanced by the improvement of disclos ure quality of environmental information, thus the enterprises shall disclose the quality of their environmental information in a positive and genuine way. The existence of instit utional investors effectively weakens the effect of disclosure quality of environmental in formation on corporate value, however the participation of institutional investors affect s the relationship above insignificantly, mainly due to the low proportional of institutional investors and their stock share in one company, which leads to the difference between the assumption and result. It is therefore, institutional investors as well as the investme nt should be encouraged at the same time, which would improve the efficiency of capita l markets and thereby boost the healthy development of China’ capital markets.