Synergistic effects or collusive effects? Green common institutional ownership and corporate green innovation strategies: Evidence from China

Climate change has intensified environmental degradation and transition risks, increasing pressure on firms to improve environmental performance through green innovation. As capital markets become increasingly important in green governance, how green common institutional owners (GCIOs) shape corporate green innovation strategies (GIS) has become a critical question. Using Chinese A-share listed firms from 2011 to 2024, this study constructs a measure of GCIOs and examines its effect on corporate GIS. The results show that GCIOs significantly promote green innovation, with a stronger effect on substantive green innovation than on strategic green innovation. The mechanism analysis indicates that the effect operates mainly through governance-enhancing and resource-enabling mechanisms. The heterogeneity analysis shows that this effect is more pronounced among firms with lower stock price volatility, manufacturing firms, and firms located in regions with higher virtual agglomeration levels. Our study provides new firm-level evidence on the governance role and economic consequences of GCIOs. The findings offer policy implications for improving green capital allocation and advancing high-quality green transformation in China and other emerging economies.