IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v53y2023ics1544612322007619.html
   My bibliography  Save this article

Is corporate environmental responsibility more valuable in the transitory period? The moderating effect of ownership type

Author

Listed:
  • Zhou, Hui
  • Nagayasu, Jun

Abstract

This study examines the effect of corporate environmental responsibility (CER) engagement on firm value by emphasizing the moderating role of ownership type. The data from Chinese A-listed firms from 2006 to 2019 are divided into a period of steady institutional background (2006–2015) and a transitory period of environmental reforms (2016–2019) to capture the differences in legal circumstances. First, we find that the impact of CER on firm value changed significantly from negative to positive over the two periods. Second, ownership type plays a moderating role in influencing the effect of CER on firm value. Third, given the environmental reforms, the CER effectiveness for state-owned enterprises affiliated with the central government increased the most, while that for private enterprises increased the least.

Suggested Citation

  • Zhou, Hui & Nagayasu, Jun, 2023. "Is corporate environmental responsibility more valuable in the transitory period? The moderating effect of ownership type," Finance Research Letters, Elsevier, vol. 53(C).
    • Handle: RePEc:eee:finlet:v:53:y:2023:i:c:s1544612322007619
    DOI: 10.1016/j.frl.2022.103585
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612322007619
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2022.103585?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zhang, Bing & Chen, Xiaolan & Guo, Huanxiu, 2018. "Does central supervision enhance local environmental enforcement? Quasi-experimental evidence from China," Journal of Public Economics, Elsevier, vol. 164(C), pages 70-90.
    2. Christina W. Y. Wong & Xin Miao & Shuang Cui & Yanhong Tang, 2018. "Impact of Corporate Environmental Responsibility on Operating Income: Moderating Role of Regional Disparities in China," Journal of Business Ethics, Springer, vol. 149(2), pages 363-382, May.
    3. Elena Escrig‐Olmedo & María Jesús Muñoz‐Torres & María Ángeles Fernández‐Izquierdo & Juana María Rivera‐Lirio, 2017. "Measuring Corporate Environmental Performance: A Methodology for Sustainable Development," Business Strategy and the Environment, Wiley Blackwell, vol. 26(2), pages 142-162, February.
    4. James Kai‐sing Kung & Chicheng Ma, 2018. "Friends with Benefits: How Political Connections Help to Sustain Private Enterprise Growth in China," Economica, London School of Economics and Political Science, vol. 85(337), pages 41-74, January.
    5. Zhenghui Li & Gaoke Liao & Khaldoon Albitar, 2020. "Does corporate environmental responsibility engagement affect firm value? The mediating role of corporate innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1045-1055, March.
    6. Kostka, Genia, 2014. "Barriers to the implementation of environmental policies at the local level in China," Policy Research Working Paper Series 7016, The World Bank.
    7. William Sucuahi & Jay Mark Cambarihan, 2016. "Influence of Profitability to the Firm Value of Diversified Companies in the Philippines," Accounting and Finance Research, Sciedu Press, vol. 5(2), pages 149-149, May.
    8. Bai, Chong-En & Du, Yingjuan & Tao, Zhigang & Tong, Sarah Y., 2004. "Local protectionism and regional specialization: evidence from China's industries," Journal of International Economics, Elsevier, vol. 63(2), pages 397-417, July.
    9. Waris Ali & Jeffrey Wilson & Muhammad Husnain, 2022. "Determinants/Motivations of Corporate Social Responsibility Disclosure in Developing Economies: A Survey of the Extant Literature," Sustainability, MDPI, vol. 14(6), pages 1-26, March.
    10. Genia Kostka, 2016. "Command without control: The case of China's environmental target system," Regulation & Governance, John Wiley & Sons, vol. 10(1), pages 58-74, March.
    11. Chen, Gongmeng & Firth, Michael & Xu, Liping, 2009. "Does the type of ownership control matter? Evidence from China's listed companies," Journal of Banking & Finance, Elsevier, vol. 33(1), pages 171-181, January.
    12. Christoph Trumpp & Thomas Guenther, 2017. "Too Little or too much? Exploring U‐shaped Relationships between Corporate Environmental Performance and Corporate Financial Performance," Business Strategy and the Environment, Wiley Blackwell, vol. 26(1), pages 49-68, January.
    13. Zhang, Xuehui & Tan, Jianhua & Chan, Kam C., 2021. "Environmental law enforcement as external monitoring: Evidence from the impact of an environmental inspection program on firm-level stock price crash risk," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 21-31.
    14. Heather R. Dixon-Fowler & Alan E. Ellstrand & Jonathan L. Johnson, 2017. "The Role of Board Environmental Committees in Corporate Environmental Performance," Journal of Business Ethics, Springer, vol. 140(3), pages 423-438, February.
    15. Woo Sung Kim & Kunsu Park & Sang Hoon Lee, 2018. "Corporate Social Responsibility, Ownership Structure, and Firm Value: Evidence from Korea," Sustainability, MDPI, vol. 10(7), pages 1-20, July.
    16. Feng Liu & Hui Lin & Huiying Wu, 2018. "Political Connections and Firm Value in China: An Event Study," Journal of Business Ethics, Springer, vol. 152(2), pages 551-571, October.
    17. Fu, Junhui & Wu, Xiang & Liu, Yufang & Chen, Rongda, 2021. "Firm-specific investor sentiment and stock price crash risk," Finance Research Letters, Elsevier, vol. 38(C).
    18. Kawai, Norifumi & Strange, Roger & Zucchella, Antonella, 2018. "Stakeholder pressures, EMS implementation, and green innovation in MNC overseas subsidiaries," International Business Review, Elsevier, vol. 27(5), pages 933-946.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lijuan Tao & Xiaoju Wei & Wenjing Wang, 2023. "Does Enterprise Internal Control Improve Environmental Performance—Empirical Evidence from China," Sustainability, MDPI, vol. 15(13), pages 1-20, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhenghui Li & Gaoke Liao & Khaldoon Albitar, 2020. "Does corporate environmental responsibility engagement affect firm value? The mediating role of corporate innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1045-1055, March.
    2. Mengxin Wang & Gaoke Liao & Yanling Li, 2021. "The Relationship between Environmental Regulation, Pollution and Corporate Environmental Responsibility," IJERPH, MDPI, vol. 18(15), pages 1-13, July.
    3. Boubaker, Sabri & Liu, Pei-Zhi & Ren, Yi-Shuai & Ma, Chao-Qun, 2024. "Do anti-corruption campaigns affect corporate environmental responsibility? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 91(C).
    4. Jong-Wan Bae & Sang-Joon Kim, 2022. "How Do Active Firms Implementing Corporate Environmental Responsibility Take Technological Approaches to Environmental Issues? A Resource-Allocation Perspective," Sustainability, MDPI, vol. 14(14), pages 1-13, July.
    5. Helna Almeida de Araujo Góes & Ghulam Fatima & Ronaldo de Oliveira Santos Jhunior & João Maurício Gama Boaventura, 2023. "Managing for stakeholders towards corporate environmental sustainability," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(4), pages 1561-1572, July.
    6. Shu, Hao & Tan, Weiqiang & Wei, Ping, 2023. "Carbon policy risk and corporate capital structure decision," International Review of Financial Analysis, Elsevier, vol. 86(C).
    7. Kong, Dongmin & Ma, Guangyuan & Qin, Ni, 2022. "The political economy of firm emissions: Evidence from a quasi-natural experiment in China," European Journal of Political Economy, Elsevier, vol. 75(C).
    8. García-Lillo, Francisco & Seva-Larrosa, Pedro & Sánchez-García, Eduardo, 2024. "On the basis of research on ‘green’ in the disciplines of management and business," Journal of Business Research, Elsevier, vol. 172(C).
    9. Zhang, Dayong & Zhang, Zhiwei & Ji, Qiang & Lucey, Brian & Liu, Jia, 2021. "Board characteristics, external governance and the use of renewable energy: International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 72(C).
    10. Ren, Xingzi & Dong, Yizhe & Guo, Jie Michael & Liu, Yaodong, 2023. "Institutional ownership and corporate greenhouse gas emissions: The evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 82(C).
    11. Lin, Boqiang & Xie, Jiawen, 2023. "Superior administration’s environmental inspections and local polluters’ rent seeking: A perspective of multilevel principal–agent relationships," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 805-819.
    12. Nikolaos S. Trevlopoulos & Thomas A. Tsalis & Konstantinos I. Evangelinos & Konstantinos Ι. Vatalis & Ioannis E. Nikolaou, 2024. "The Role of Environmental Regulatory- and Proactive-Driven Corporate Strategy in Creating Corporate Green Intellectual Capital (GIC) and Environmental Innovation (EI)," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 4750-4775, March.
    13. Kong, Dongmin & Liu, Chenhao, 2024. "Centralization and regulatory enforcement: Evidence from personnel authority reform in China," Journal of Public Economics, Elsevier, vol. 229(C).
    14. Yang, Chih-Hai, 2023. "Competition in the Chinese market: Foreign firms and markups," Journal of the Japanese and International Economies, Elsevier, vol. 67(C).
    15. Li, Donghui & Liao, Li & Luo, Yuanhang & Zhang, Xueyong, 2014. "Firm headquarters location, ownership structure, and stock return co-movements," Pacific-Basin Finance Journal, Elsevier, vol. 30(C), pages 158-172.
    16. Suchismita Ghosh & Ritu Pareek & Tarak Nath Sahu, 2024. "Do Carbon Performance and Disclosure Practices Effect Companies’ Financial Performance: A Non-Linear Perspective," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 31(3), pages 733-754, September.
    17. Yaoxiaoxue Hong & Xianling Jiang & Beibei Shi & Chang Yu, 2022. "Do Fiscal Environmental Protection Expenditures Crowd Out Corporate Environmental Protection Investments?," Sustainability, MDPI, vol. 14(20), pages 1-23, October.
    18. Haowei Yu & Ruoyu Wang & Ling‐Yun He, 2023. "Environmental implications of political connections and state ownership: Theory and evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1228-1253, March.
    19. Josep Garcia‐Blandon & David Castillo‐Merino & Nour Chams, 2020. "Sustainable development: The stock market's view of environmental policy," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3273-3285, December.
    20. Zhenghui Li & Yan Wang & Yong Tan & Zimei Huang, 2020. "Does Corporate Financialization Affect Corporate Environmental Responsibility? An Empirical Study of China," Sustainability, MDPI, vol. 12(9), pages 1-19, May.

    More about this item

    Keywords

    Corporate environmental responsibility; Firm value; Centralization; Local protectionism; Ownership type;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:53:y:2023:i:c:s1544612322007619. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.