(The) part and the whole

Abstract

The institutional investors are an important stakeholder as there are some institutionalized rules to guarantee their participation in the investee’s decision-making system. Prior studies showed that the link between corporate governance and environmental performance, but only explains in the level of the individual institutional owners or the simply aggregated investor group overlooking the interactions between the individuals which can stimulate and limit their social actions. This study adds one other perspective, the network as a relationship within the institutional ownership group, and seeks the relational nature of their influence that cannot be fully captured by the simple aggregation of individual investors to the investee’s environmental performance with the 6-year panel data of S&P 500 components. The cohesion of the institutional co-investment network is positively associated with corporate environmental performance. The findings in this research have implications for research on the role of relational structure in institutional investor groups.