The Impact of Green Governance and the Moderating Role of Institutional Ownership on Financial Reporting Quality in VN-Allshare Listed Companies

Abstract

This study aims to examine the impact of green governance on financial reporting quality, and more importantly, we investigate the moderating role of institutional ownership in this relationship among companies listed in the VN-Allshare index. By analyzing panel data of 346 non-financial companies from 2017 to 2024 through Fixed Effects Model regression, Driscoll-Kraay robust standard errors, and the System GMM method. The results show that green governance has no significant direct impact on financial reporting quality. Meanwhile, the study finds that institutional ownership plays a positive moderating role, enhancing the positive impact of green governance on financial reporting quality. However, this effect is only pronounced for substantive green governance mechanisms (linking executive compensation to environmental performance, having environmental experts on the board) rather than for symbolic mechanisms (establishing a committee). These findings imply that for green governance to be truly effective, merely adopting superficial structures is insufficient; it requires proactive monitoring from institutional shareholders to transform commitments into substantive transparency. The novelty of this research lies in it being one of the pioneering analyses in Vietnam on the conditional relationship of green governance, providing empirical evidence of the "catalyst" role of institutional investors and, for the first time, clearly distinguishing the impact between "symbolic" and "substantive" governance mechanisms