Institutional investors increasingly hold substantial stakes across competing firms in various industries, creating a landscape where competitors often share multiple investors. While agency theory has primarily emphasized the financial advantages of common ownership for investors, its socio-environmental implications remain contentious. Drawing on stakeholder theory, this study proposes that common ownership can strengthen the positive relationship between institutional investors and corporate environmental performance. Using a quantitative research design with 9,229 firm-year observations from the S&P 1500 index between 2005 and 2021, we find that both high and medium levels of common ownership enhance this positive relationship. In contrast, low levels of common ownership are associated with a negative relationship. These findings advance our understanding of how institutional and common ownership influence firms' environmental performance. The study offers a theoretical and practical framework for leveraging common ownership to align shareholder interests, corporate actions, and broader societal and environmental goals.
