Can Institutional Investors’ Shareholding Promote Green Innovation

China’s development has entered a new era,and it is urgent to develop a green economy,Strengthening the management and supervision of ecological environment is one of the most important tasks of our government at present stage The effect of the existing terminal treatment mechanism is not ideal.To solve the environmental pollution fundamentally,realize green transformation and upgrading of industries financial capital means are indispensable.The report of the 20 th National Congress of the Communist Party of China proposed to promote the green development of manufacturing.We will improve fiscal,taxation,financial,investment,and pricing policies and standards that support green development.As an important force in the capital market,institutional investors can,on the one hand,promote the green innovation of enterprises by easing the financing constraints and improving the internal control of enterprises.On the other hand,the short-term performance pressure faced by institutional investors may not be conducive to corporate green innovation.Based on this,this paper attempts to investigate the influence of institutional investors on corporate green innovation from the perspective of institutional investors’ shareholding.This paper takes Shanghai and Shenzhen A-share manufacturing enterprises from2007 to 2020 as samples,and empirical research shows that institutional investor shareholding is conducive to enterprises’ green innovation.The mechanism test of this paper shows that alleviating the financing constraints faced by enterprises and improving the quality of internal control are two potential paths for institutional investors to promote corporate green innovation.Further research shows that the better the regional institutional environment is,the better institutional investors can promote corporate green innovation,which may be due to the strengthening of external supervision pressure of enterprises and the decrease of supervision cost of institutional investors.In addition,as a positive signal,government subsidies can convey to the outside world that enterprises have investment value,attract more external financing,further alleviate the financing constraints faced by enterprises,and play a positive role in promoting corporate green innovation for institutional investors.Finally,high R&D investment of enterprises can positively regulate the promotion of green innovation by institutional investors.The reason is that high R&D investment can enhance their competitive advantages and attract more external investors,including institutional investors,so as to facilitate the green innovation of enterprises.After further distinguishing the regional attributes of institutional investors,it is found that local institutional investors can better promote the green innovation of enterprises,because of the export limits of foreign advanced green technology and the information and governance advantages of local institutional investors.The possible innovation points of this paper are as follows:(1)From the perspective of the "invisible hand" of the capital market,this paper studies the impact that institutional investors may have on the green innovation of enterprises,which is complementary to previous studies based on the "visible hand" of government policies;(2)From the perspective of green innovation,it reveals the differentiated governance effect brought by the heterogeneity of institutional investors,and clarifies the potential path mechanism for institutional investors to influence corporate green innovation by improving the quality of internal control and easing financing constraints;At the same time,it pays attention to the adjustment effect brought by the internal and external environment of the enterprise;(3)Based on the governance behaviors and effects of institutional investors,this paper explores the economic motivation and policy orientation of institutional investors in promoting corporate green innovation,indicating that external governance forces can be actively used to promote corporate green research and development and realize green economy..