Mapping the influence: Institutional blockholder coordination and climate change risk disclosure

Khalifa, Mohamed; Ullah, Subhan; Abdelfattah, Tarek

Abstract

This study investigates the relationship between institutional blockholder coordination, proxied by geographic proximity, and climate change risk disclosure. Using a sample of 2887firm-year observations for S&P 500 companies from 2010 to 2022, we reveal that a firm's climate change risk disclosure decreases when its institutional blockholders are more coordinated. In addition, we find that the negative effect manifests more in firms with less diversified institutional blockholders, a smaller number of institutional blockholders, a prominent position to their blockholders, and more dedicated institutional blockholder ownership. Moreover, we show that the negative coordination-disclosure relation is more pronounced in firms with corporate general counsels, a non-concentrated customer base, higher asset tangibility, and those that are environmentally sensitive. Our main finding still holds after using an alternative measure for climate change risk disclosure as well as a battery of endogeneity tests. Finally, we propose that institutional blockholder coordination lessens climate change risk disclosure through the channel of increased performance-induced CEO dismissal. Collectively, this study provides insightful implications for academics, financial statement users, regulators, and policymakers.

Citation

Khalifa, M., Ullah, S., & Abdelfattah, T. (2024). Mapping the influence: Institutional blockholder coordination and climate change risk disclosure. Journal of Environmental Management, 370, Article 122788. https://doi.org/10.1016/j.jenvman.2024.122788

• Journal Article Type: Article
• Acceptance Date: Sep 29, 2024
• Online Publication Date: Oct 16, 2024
• Publication Date: 2024-11
• Deposit Date: Nov 15, 2024
• Publicly Available Date: Nov 19, 2024
• Journal: Journal of Environmental Management
• Print ISSN: 0301-4797
• Electronic ISSN: 1095-8630
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 370
• Article Number: 122788
• DOI: https://doi.org/10.1016/j.jenvman.2024.122788
• Keywords: Climate change risk disclosure; 10-K filings; Institutional blockholder coordination; Geographic proximity 2
• Public URL: https://nottingham-repository.worktribe.com/output/41924532
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S0301479724027749?via%3Dihub