How do Institutional Investors Influence Corporate Governance under Legal Psychology

Abstract

In order to give full play to the role of field research of legal psychology institutional investors in promoting enterprise environmental governance, this article puts forward the research on how legal Psychology institutional investors affect the corporate governance environment. Taking the listed companies in the A-share heavy pollution industry of Shenzhen Stock Exchange from 2018 to 2021 as a sample, this article tests the impact and action mechanism of legal Psychology institutional investors' field research on corporate environmental governance. Hypothesis 1: the field research of legal Psychology institutional investors can promote the environmental governance of enterprises. Hypothesis 2: for enterprises with poor environmental information disclosure, the impact of field research of legal Psychology institutional investors on enterprise environmental governance is more obvious. Hypothesis 3: for enterprises with more concentrated distribution, the impact of field research of legal Psychology institutional investors on enterprise environmental governance is more obvious. Leadership power has the three attributes of management, social psychology, and law, and its essence is the socialization of legal psychology. Under the perspective of legal psychology, the psychological mechanism of leadership power is mainly manifested in three aspects: increasing the social distance, activating the approach system, and inducing the control illusion. The cumulative number of field investigations conducted by the enterprise in the current year +1 is adopted, and the logarithm is taken as the measurement index of the field investigation of legal Psychology institutional investors, which is expressed by Investigate. In the robustness test part, the virtual variables are set by whether the enterprise is investigated in the field in that year. The results show that in uncontrolled years and industries, the regression coefficients of legal Psychology institutional investor investigation and enterprise environmental protection capital investment are 0.0703 and 0.2416, respectively, which are significant at the level of 5%. After controlling the year and industry, the regression results show that the field investigation of legal Psychology institutional investors and enterprise environmental capital investment are still positive, significantly at the level of 5% and 1%, respectively. The environmental capital investment of enterprises with poor environmental information disclosure (0.479 and 1.161) is higher than that of enterprises with good environmental information disclosure (0.252 and 0.618), and the mean t-test maintains the significance level of 1%, indicating that the impact of field research on enterprise environmental governance is more obvious in enterprises with poor environmental information disclosure, which preliminarily verifies Hypothesis 2 of this article. Similarly, when the distribution of enterprises is more concentrated, the environmental capital investment of enterprises is 0.536 and 1.286, which is higher than that of enterprises with a more dispersed distribution (0.315 and 0.778) and maintains a significant level of 1%. The results show that obtaining environmental information is helpful for stakeholders to supervise enterprise environmental governance. Therefore, we should formulate and issue policies and regulations that require enterprises to disclose environmental information as soon as possible, improve the standards of environmental information disclosure, establish an enterprise environmental information disclosure platform, and improve the level and quality of environmental information disclosure.