Events

Dr .Emily Jing Wang
Assistant Professor of Accounting
Hong Kong University of Science and Technology

We test whether the EU’s 2017 mandatory adoption of sustainability reporting increases institutional ownership. As predicted, we find that the mandate increases foreign institutional ownership but not domestic institutional ownership. We also find that the increase in foreign ownership is larger for companies in which the mandate resulted in an increase in their environmental disclosures; and for companies that combine their sustainability disclosures with their financial reports as compared with companies that issue stand-alone sustainability reports. Further, the increase in ownership is larger among investors that are from countries with strong social norms towards environmental and social issues, and among companies with a greater focus on sustainability. Taken together, our findings are consistent with mandatory sustainability reporting in the EU reducing information asymmetry for foreign institutional investors, thereby increasing investment.