Does a not-for-profit minority institutional shareholder promote corporate green innovation? A quasi-Natural experiment

In 2016, the China Securities Regulatory Commission authorized the China Securities Investor Services Center (CSISC), a not-for-profit institution, to buy and hold 100 shares of listed firms in pilot regions. Exploiting CSISC shareholding as an exogenous shock, we employ a difference-in-differences analysis of a sample of listed firms from to 2013-2017 to investigate whether CSISC shareholding can promote corporate green innovation. Our results show that CSISC shareholding play a significant role in promoting corporate green innovation. Channel tests indicate that CSISC shareholding can promote corporate green innovation by mitigating information asymmetry and alleviating agency conflicts. Our additional analyses reveal that corporate governance can moderate the impact of CSISC shareholding on green innovation, and CSISC shareholding has different impacts on green invention patents and green utility model patents. Our additional analyses also report that the difference in corporate green innovation between the treatment and control groups diminishes after implementing CSISC shareholding nationwide. Our findings contribute to the literature on the economic consequences of CSISC shareholding and extend the literature on the determinants of corporate green innovation in investor protection.