Institutional ownership, environmental, social, and governance performance and disclosure: A review on empirical quantitative research

Since the financial crisis of 2008–2009, nonfinancial-related shareholder activism increased, as public interest entities (PIEs) should strengthen their environmental, social, and governance (ESG) activities. This study aims to determine whether institutional ownership (IO) impacts ESG performance and disclosure and vice versa. Moreover, IO’s moderating and mediating influence on the relationship between ESG and firms’ financial consequences is included. This is the first literature review focusing on IO and ESG, describing IO as independent, dependent, moderator, and mediator variable. A structured literature review with 81 empirical-quantitative (archival) studies on that topic is presented based on an agency theoretical framework. Regarding 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 an amount yet, stressing major research gaps.