China's rapid economic growth has led to significant environmental challenges, particularly concerning pollution from its high-tech sector. While investors are increasingly interested in corporate environmental performance (CEP), the relationship between investor attention and CEP remains unclear, especially in the context of emerging economies. This study addresses this gap by focusing on Chinese high-tech firms. The high-tech sector is chosen due to its significant contribution to economic growth, its substantial environmental impact (especially carbon emissions, as illustrated in Figure 1), and its potential for environmental innovation. The study hypothesizes that investor attention influences CEP, and that media attention and coverage sentiment moderate this relationship. The rise of social media amplifies the dissemination of information, potentially influencing investor decisions and corporate behavior. Prior research has highlighted the importance of both media attention, in driving voluntary environmental disclosures and influencing corporate strategies, and media coverage sentiment in shaping corporate actions and investor perceptions. This study aims to empirically investigate these relationships using a dynamic panel GMM approach.

The literature review explores the concept of corporate environmental performance (CEP), its measurement (pollutant emissions, ESG databases like ASSET4 and Sino-Securities Index), and the factors influencing it (digital technologies, corporate governance, R&D investment). The review acknowledges the role of informal regulation, such as media scrutiny and investor attention, in shaping CEP. Existing research on investor attention and CEP reveals conflicting results: some studies show a positive relationship, while others indicate a negative one. The positive effects are attributed to increased transparency and pressure to avoid reputational damage. Negative effects stem from market pressures leading to short-term focus, potentially harming long-term environmental investments. The review also examines the roles of media attention and coverage sentiment, which have been shown to influence corporate environmental disclosures, strategies, and investor perceptions, often acting as moderating factors.

The study employs a dynamic panel data model estimated using the generalized method of moments (GMM) technique. The dependent variable is corporate environmental performance (CEP), measured using the environmental score from the Sino-Securities Index ESG Ratings. The independent variable is investor attention, measured using the logarithm of the number of investor comments from the Guba Database. Two moderating variables are included: media attention (logarithm of mentions in news reports from the Chinese Financial News Database) and media coverage sentiment (Janis-Fadner coefficient calculated from the same database). Control variables include firm size, number of employees, Tobin's Q, listing age, and return on equity (data from CSMAR). The sample comprises 463 high-tech companies listed on the Shanghai and Shenzhen Stock Exchanges from 2011 to 2022, selected according to criteria outlined in the “Administrative Measures for the Recognition of High-tech Enterprises”. The study uses both difference GMM and system GMM to address potential endogeneity issues. Marginal effects are calculated to assess the impact of changes in investor attention under different levels of media attention and sentiment. Heterogeneity analyses are conducted across different industries (manufacturing vs. IT services), pollution levels (polluted vs. non-polluted), and ownership structures (state-owned vs. private).

Descriptive statistics and correlation analysis showed a positive correlation between investor attention and CEP, but this correlation is not strong. Benchmark regression results (Table 3) consistently demonstrate a statistically significant negative impact of investor attention on CEP across both difference GMM and system GMM estimations, even after robustness checks (Table 4) excluding the COVID-19 pandemic period and using alternative measures of CEP (environmental information disclosure in Table 5). These findings align with studies indicating that intense investor attention might lead firms to focus on short-term financial gains at the expense of environmental considerations. The inclusion of interaction terms (Table 6) reveals significant moderating effects: (1) Media attention positively moderates the relationship between investor attention and CEP; (2) Media coverage sentiment also positively moderates this relationship. Marginal effects analysis (Figure 3) illustrates that higher media attention and positive sentiment mitigate the negative impact of investor attention on CEP. Heterogeneity analysis (Tables 7, 8, and 9) reveals variations in these moderating effects across different industries, pollution levels, and ownership structures. For example, in the IT service industry, higher media attention exacerbates the negative impact of investor attention on CEP; while in non-polluting and state-owned enterprises, positive media coverage sentiment can exacerbate the negative impact.

The findings challenge the conventional wisdom that increased investor attention always leads to improved CEP. The negative impact of investor attention on CEP in high-tech firms suggests that intense market pressure and short-term financial goals might overshadow long-term environmental considerations. The moderating roles of media attention and coverage sentiment highlight the importance of external pressures in shaping corporate behavior. Positive media coverage, by reinforcing legitimacy and shaping public perceptions, can offset the negative consequences of intense investor focus. The heterogeneity analysis reveals the complexity of these interactions, with variations across sectors and firm characteristics. The results support the applicability of legitimacy theory, highlighting the significant influence of societal expectations and media narratives on corporate environmental strategies.

This study demonstrates the significant negative impact of investor attention on the environmental performance of Chinese high-tech firms, but also shows that media attention and positive coverage can mitigate this effect. Policymakers should encourage robust ESG reporting, develop green investment indices, and incentivize green investments. Businesses should proactively engage with the media to manage investor perceptions. Future research could explore other factors influencing this complex relationship and investigate the long-term effects of these interactions.

This study focuses solely on Chinese high-tech firms, limiting the generalizability of the findings. The use of specific databases might influence the results, as might the reliance on secondary data. Further research could explore these factors in other contexts and with more diverse data sources.