Corporate R&D intensity, fund network connectivity, and green fund concern: analysis and test of R&D from listed corporates in China

According to ownership activism, the development of green funds in the capital market should promote corporate sustainability. However, when green funds implement green screening strategies, myopic managers may not pay attention to a corporate's long-term innovative activities due to the attraction of cash flows and the building of manager reputation. We use the long-term and externality of corporate R&D to explain the changes in green fund holdings, and further examine the impact of fund characteristics and corporate heterogeneity on green fund holdings. The results reveal a negative relationship between corporate R&D intensity and green fund holdings, and this negative relationship intensifies when green funds with high centrality in the network exhibit stronger informational advantages. Notably, we find no evidence that the traditional funds adopted a negative screening strategy towards corporates as green funds do. In addition, myopic green funds focus more on attracting cash flows, improving performance rankings and short-term corporate performance over long-term, sustainable and market-oriented governance behavior. These conclusions provide important implications for the development and optimization of China's green fund market.