An Empirical Study On China’s Corporate Environmental Performance And Investment Behavior Of Institutional Investors

With the advancement of technological level and globalization,the rapid economic development has brought tremendous challenges to the environment.Many listed companies have been exposed pollution incidents frequently,so listed companies have become an important source of environmental problems.The concept of harmonious coexistence between man and nature has been widely accepted around the world.Environmental issues are related to people’s health and social stability.In recent years,various sectors of society have called for enterprises to fulfill more environmental protection responsibilities.It has become a consensus that enterprises should realize economic benefits without damaging the environment.At the same time,the government departments have also issued a series of relevant policies and regulations to deal with the problem of pollution,so as to enhance the awareness of social responsibility of companies.In pursuit of economic benefits and protect the interests of shareholders,the companies need to pay attention to non-commercial contributions to stakeholders and environment.For example,the"Guidance on Strengthening the Supervision and Administration of the Environmental Protection of Listed Companies" issued by the China Environmental Protection Organization in 2008 and the "Guidelines on the Disclosure of Environmental Information of Listed Companies" issued by the Shanghai Stock Exchange.Under the background of China’s vigorous development of institutional investors,comparing with the blindness of individual investors,institutional investors have specialized investment teams,prudent investment behavior and scale economic advantages.Under the promotion of the government,public pressure and the pursuit of its own value,institutional investors have sufficient motivation to concern about the environmental performance of enterprises.Therefore,it has important theoretical and practical significance to study the corporate environmental performance’s influence to the institutional investor’s investment decision.The purpose of this paper is to explore the influence of corporate environmental performance on investment behavior of institutional investors,and to study the heterogeneity of investment behaviors of different institutional investors for corporate environmental performance.Firstly,the paper reviews and combs the relevant literature and theoretical basis to make clear the subject and direction of research.Then,on above foundation,it formulates research design involves research ideas and frameworks,research sample and data,and research methods.The paper focuses on the highly polluted industries,select a-share companies in Shanghai and Shenzhen from 2010 to 2016 as the sample,do an empirical research on the relations between corporate environmental performance and institutional investor’s investment decision through methods like correlation analysis and regression analysis.Meanwhile,the paper considers the heterogeneity of institutional investors.Finally draw the conclusions and prospects from analyzing the empirical results.Through theoretical and empirical analysis,the paper comes to conclusions as follows:China’s overall institutional investor has a clear preference for the corporate environmental performance,that is,institutional investor is in favor of these public companies with better corporate environmental performance in investment decision-making process,and this kind of influence have certain delayed effect.In addition,the impact of corporate environmental performance on the shareholding decisions of various institutional investors presents a certain degree of differentiation.In the analysis of the six institutional investor,it was found that only the funds and social security funds display an obvious investment favor to better behaved companies,this kind of influence also have delayed effect.However,the investment behaviors of QFII,brokerage firms,insurance company and other institutions are not significantly correlated with the corporate environmental performance.This is mainly due to differences in the capital scale,management style,investment philosophy and others features among various types of institutional investors.As a result,institutional investors have different attention to corporate environmental performance when formulating investment strategies.Finally,based on the front studies,this paper puts some advices.Under the background of China’s vigorous development of institutional investors,the transformation of institutional investors to value investors should be promoted.Establish a complete environmental performance evaluation system and database so that institutional investors can better evaluate the corporate environmental performance and make rational investment decisions.