Does Greenness Matter? Environmental Performance, Ownership Structure and Analyst Coverage

We examine how the ownership, analyst coverage and stock market valuation of a sample of U.S. firms vary with their environmental performance. Both “green” and “toxic” firms have a larger number of shareholders but a smaller percentage of institutional owners and ownership stakes relative to environmentally neutral firms. Nonetheless, toxic firms have higher institutional ownership than green firms. All institutional investor types except the category that includes universities, pension plans and employee stock ownership plans hold smaller fractions of green firms, while the latter institutional investor category is the only one to hold a lower percentage of toxic firms. Analyst coverage is higher for toxic firms, and green and toxic industries have the lowest and the highest analyst coverage, respectively. Both green and toxic firms have lower values of Tobin’s Q than environmentally neutral firms.