Institutional investors' corporate site visits and firm-level climate change risk disclosure

This study examines whether and how institutional investors' site visits affect firm-level discretionary disclosure of climate change risk. Using a sample of Chinese listed companies on the Shenzhen Stock Exchange from 2013 to 2021, we find that site visits by institutional investors significantly promote corporate climate change risk disclosure (CCRD). This positive correlation is robust to a series of sensitivity tests, including alternative measures of institutional investors' site visits and corporate CCRD, alternative samples, a firm fixed effects model, one-year lag of the independent variable, an instrumental variable method, and a propensity score matching procedure. Mechanism analyses indicate that the positive impact of institutional investors' site visits on corporate CCRD is primarily driven by increased corporate information exposure. Further analyses demonstrate that the effect of site visits on firm-level CCRD is more pronounced in firms with weaker internal corporate governance or external governance. This study extends the existing literature on the economic consequences of institutional investors' site visits and the driving factors of corporate discretionary disclosure regarding climate change risk, providing insightful implications for corporate managers, investors, and regulators.