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Related party transactions and corporate environmental responsibility

Author

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  • Choi, Wonseok
  • Chung, Chune Young
  • Rabarison, Monika K.
  • Wang, Kainan

Abstract

We examine the effect of related party transactions on corporate environmental responsibility and find that firms with more related party transactions tend to have more controversial environmental reports, less emissions reduction, and less environmental expenditures. This relationship is more significant for firms with a high investment-cash flow sensitivity and those with a low ESG score. Overall, the results corroborate the hypothesis that the marginal costs of corporate environmental responsibility outweigh the benefits for financially constrained firms, thus deterring these firms from engaging in corporate environmental responsibility activities.

Suggested Citation

  • Choi, Wonseok & Chung, Chune Young & Rabarison, Monika K. & Wang, Kainan, 2022. "Related party transactions and corporate environmental responsibility," Finance Research Letters, Elsevier, vol. 46(PA).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321004669
    DOI: 10.1016/j.frl.2021.102490
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    References listed on IDEAS

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    Cited by:

    1. Zhang, Rongwu & Fu, Wenqiang, 2023. "Multiple large shareholders and corporate environmental performance," Finance Research Letters, Elsevier, vol. 51(C).
    2. Boqiang Lin & Qianxiang Zhang, 2023. "Corporate environmental responsibility in polluting firms: Does digital transformation matter?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(5), pages 2234-2246, September.
    3. Rongwu Zhang & Wenqiang Fu & Yingxu Kuang, 2022. "Can Digital Economy Promote Energy Conservation and Emission Reduction in Heavily Polluting Enterprises? Empirical Evidence from China," IJERPH, MDPI, vol. 19(16), pages 1-21, August.

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    More about this item

    Keywords

    Corporate environmental responsibility; Pollution emission; Related party transaction; Internal capital market; Corporate governance;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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