Share Pledging and Environmental Investment: Evidence From China
研究中国上市公司控股股东股权质押如何促使企业增加环境投资以避免追加保证金风险，并发现该效应在重污染行业和污染严重地区更强，而环境投资能缓解质押对股价崩盘风险和企业价值的负面影响。
ABSTRACT We investigate whether share pledging by controlling shareholders influences corporate environmental investment. On the basis of a sample of listed companies from 2003 to 2022 in China, we find that firms whose shares have been pledged by their controlling shareholders and those with a higher share pledge ratio of the controlling shareholder tend to increase environmental investment to avoid margin call risk. We further find that this positive relationship is stronger in heavily polluting industries, for firms that operate in regions with more severe pollution, and for those that face greater margin call pressure; the effect is weaker for more financially constrained firms. Additional analyses reveal that environmental investment tends to decrease once controlling shareholders release their pledged shares. Moreover, firms whose controlling shareholders engage in share pledging often increase voluntary environmental disclosures as a complementary strategy to mitigate potential risks. Finally, our findings affirm the efficacy of this risk management strategy: Environmental investment significantly mitigates the adverse impact of pledging on stock price crash risk and firm value compared to firms that do not adopt this practice.