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Managerial myopia and carbon emission: Evidence from China

Author

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  • Xie, Xuejing
  • Gong, Yukai
  • Cheng, Le

Abstract

Firms play a pivotal role in global warming, while the strategic vision of their managers significantly shapes their carbon emission decisions. This research investigates the impact of managerial myopia on firm-level carbon emission intensity by OLS regression. Using Chinese firm-level data from 2007 to 2016, our findings indicate that firms exhibit an increase in carbon emission intensity as managerial myopia escalates, with carbon emission intensity rising by 7.67 % for every standard deviation increase in managerial myopia. The results remain robust after conducting several robustness tests, including alternative measures, controlling for additional fixed effects, lagged independent variable, instrumental variable method, propensity score matching, and entropy balancing matching. Green innovation, customer concentration, and energy consumption are important channels through which managerial myopia influences firms' carbon emission intensity. Further evidence suggests that firms with higher financial constraints and poorer operational efficiency are more positively impacted by managerial myopia. However, effective internal governance can reduce the impact of managerial myopia on carbon emission intensity. This study underscores the importance for firms to reduce carbon emissions by enhancing internal governance.

Suggested Citation

  • Xie, Xuejing & Gong, Yukai & Cheng, Le, 2025. "Managerial myopia and carbon emission: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:pacfin:v:90:y:2025:i:c:s0927538x24003664
    DOI: 10.1016/j.pacfin.2024.102614
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    More about this item

    Keywords

    Managerial myopia; Carbon emission intensity; Energy consumption; Green innovation; Customer concentration;
    All these keywords.

    JEL classification:

    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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