Does mutual fund ownership increase corporate environmental spending?

Abstract

<p>This paper examines how mutual fund ownership influences corporate environmental spending, and the channels through which this impact operates. Using a unique hand collected dataset of Chinese listed companies between 2011 and 2018, we report mutual fund investment is associated with significantly increased corporate environmental spending. This influence is moderated by institutional factors including state-owned enterprises and stronger legal environments. We also assess the environmental awareness associated with environmental spending through examining the number of ‘green’ questions raised by investors and the ‘green’ credentials of board members. Moreover, we find that mutual funds with green investment objectives have significantly increased corporate environmental spending levels. We conclude mutual find ownership has a positive influence on environmental spending and should be encouraged within China.</p>