Share pledging and corporate environmental investment

This paper examines the effect of share-pledging of controlling shareholder on corporate envi-ronmental investment. Using a sample of Chinese listed companies over the period 2010 - 2019, we find evidence that there is a negative relationship between share-pledging and corporate environmental investment. The above conclusion is still credible after a series of robustness tests. Further, we identify that the relationship is more pronounced in firms with more serious tunneling by controlling shareholder and the risk of share price collapse. Overall, the paper en-riches the literature on corporate environmental governance effects of ownership structure and the research on economic consequences of share-pledging, which may be of interest to regulators in developing countries who are concerned with the long-term performance of corporate envi-ronmental governance.

Automated summary

This paper examines the impact of share-pledging by controlling shareholders on corporate environmental investment and finds a negative relationship between the two. The study also shows that this relationship is more pronounced in firms facing higher risks of tunneling and share price collapse.