Institutional Ownership, ESG Performance and Disclosure – A Review on Empirical Quantitative Research

Since the financial crisis of 2008-09, non financial-related shareholder activism increased, as public interest entities (PIEs) should strengthen their environmental, social and governance (ESG) activities. The aim of this study is whether institutional ownership (IO) has an impact on ESG performance & disclosure and vice versa. Moreover, the moderating and mediating influence of IO on the relationship between ESG and firms’ financial consequences is included. This is the first literature review with a focus on IO and ESG, describing IO as independent, dependent, moderator and mediator variable. Based on an agency theoretical framework, a structured literature review with 81 empirical-quantitative (archival) studies on that topic is presented. With regard to the main results, long-term IO leads to increased ESG performance. Moreover, ESG performance promotes the ratio of institutional investors. Other relationships are rather heterogeneous and too low in amount yet, stressing major research gaps