The Heterogeneity Of Company's Environment Investment,institutional Investor And Cost Of Equity Capital

With the rapid development of China's economy,the destruction rate of the environment is also accelerating.In recent years,environmental problems such as smog and water pollution have attracted more and more attention.The state has continuously improved environmental protection laws and regulations from the institutional level.China has officially implemented the environmental protection tax law since January 1,2018,which has taken a solid step in promoting the construction of ecological civilization.With the implementation of the environmental protection tax,enterprises will certainly pay more attention to environmental protection.If the pollutants are discharged arbitrarily,they will face high environmental taxes and severe penalties,which will affect the performance and image of the company.Enterprises in heavy polluting industries are subject to supervision as the key to environmental protection,and it is foreseeable that they will be subject to more stringent supervision.In order to cater to supervision,enterprises in heavy polluting industries will increase their investment in environmental protection to meet the environmental protection requirements set by the state and avoid high environmental taxes and penalties.Due to the heterogeneity of corporate environmental protection investment,there are costly and investmentoriented environmental protection investment,enterprises which increase the cost of environmental protection investment,will increase the company's expenses,affect the company's operating performance,and increase business risk.The increase in business risk will increase the risk expectations of investors.Will the increase in costly environmental protection investment increase the cost of equity capital of enterprises? Investment-oriented environmental protection investment can further reflect the fulfillment of social responsibilities of enterprises.The active implementation of social responsibilities by enterprises can reduce the risk expectations of investors.Then,does the environmental protection investment of cost-effective environmental protection investment and investment environmental protection have different effects on the cost of equity capital? Corporate environmental protection investment information as corporate financial information disclosure,due to the complexity and professionalism of environmental protection information,ordinary investors are not likely to pay attention,and institutional investors,due to their professionalism,will interpret environmental protection investment information,and whether different types of institutional investors respond to the increase in corporate environmental protection investment in different ways? These issues deserve further discussion.The empirical results of this paper show that:(1)The increase of cost-effective environmental investment in enterprises with heavy pollution will increase the cost of equity capital of enterprises;the increase of investment-oriented environmental investment will reduce the cost of equity capital of enterprises,but the cost reduction effect is only reflected in state-owned enterprises,not obvious in non-state-owned enterprises.(2)The increase of cost-effective environmental investment will reduce institutional investors' shareholding,and the increase of investment-oriented environmental investment will promote institutional investors' shareholding.These two effects are reflected in non-state-owned enterprises;in addition,in non-stateowned enterprises,the increase in cost-effective environmental protection investment will reduce the shareholding of sensitive institutional investors;in stateowned enterprises,the increase in investment-oriented environmental investment will promote the holding of sensitive institutional investors.(3)Institutional investors' shareholding plays a regulatory role in the relationship between corporate environmenta investment and the cost of equity capital.The specific role is that the increase in shareholding of sensitive institutional investors will enhance the enhancement effect of cost-effective environmental investment on the cost of equity capital;in non-state-owned enterprises,the increase in shareholding of non-sensitive institutional investors will reduce the enhancement effect of cost-effetive environmental investment on the cost of equity capital.The innovations and contributions of this paper are mainly focused on:(1)This paper takes the enterprise environmental investment as the research object,tries to determine the concept of enterprise environmental investment,studies the heterogeneity of enterprise environmental investment,and divides the enterprise environmental investment into cost-effective environmental investment and investment-oriented environment investment,study the impact of different types of environmental investment on the cost of equity capital,try to solve the academic situation of the enterprise's environmental investment concept is unclear,general status.And the research confirmed the different impacts of environmental protection inputs of different nature on the cost of equity capital.(2)In the study of the impact of corporate environmental protection investment on institutional investors' shareholding,this paper distinguishes the nature of different enterprises,divides heavily polluting industry enterprises into state-owned enterprises and non-stateowned enterprises,distinguishes the heterogeneity of institutional investors,and divides institutional investors into sensitive and non-sensitive institutional investors,the group study found that in different natures,the heterogeneity of corporate environmental investment will have different effects on institutional investors' shareholdings.Once again,it is proved that different environmental investment will have different economic consequences.(3)The existing literature on corporate environmental investment is more focused on the factors affecting the environmental investment of enterprises,and less research on the economic consequences of corporate environmental investment.And almost no scholars clearly divide the enterprise environmental investment into cost-effective and investment-oriented enterprise environmental investment.This paper enriches the the existing research on the economic consequences of environmental investment and provides a certain research direction.(4)This paper adopts the method of substitution variable measurement to test the robustness,and uses the two-stage instrumental variable regression method to alleviate the endogenous problems in this paper,and the Heckman test to alleviate the self-selection problem of the sample,further increasing the reliability of the conclusion of this paper.