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Does Entrepreneur Invest More in Environmental Protection When Joining the Communist Party? Evidence from Chinese Private Firms

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  • Youliang Yan
  • Xixiong Xu

Abstract

This study examines the role of affiliation with the ruling Communist Party in corporate environmental investment. Using a nationwide survey of Chinese private firms, we find that the Party membership of private entrepreneurs has a positive effect on corporate environmental investment, which suggests that Party status severs as a communication bridge and goal coordinator between the government and firms, thus encouraging them to participate more in environmental activities. Furthermore, this effect is more prominent when firms are located in regions with stricter legal supervision and lower levels of corruption, involve in a government-created business association and have better performance in profitability. Mechanism tests show that entrepreneurs with Party membership will promote firms to form a closer government-firm interaction and develop a better sense of social responsibility. Our findings highlight the entrepreneur’s Party status as an important driver of environmentally responsible corporate decision-making.

Suggested Citation

  • Youliang Yan & Xixiong Xu, 2022. "Does Entrepreneur Invest More in Environmental Protection When Joining the Communist Party? Evidence from Chinese Private Firms," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(3), pages 754-775, February.
    • Handle: RePEc:mes:emfitr:v:58:y:2022:i:3:p:754-775
    DOI: 10.1080/1540496X.2020.1848814
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    Citations

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    Cited by:

    1. Hongzhen Zhang & Jingyang Yu & Yakun Chen, 2024. "Party Branch Embeddedness and Urban–Rural Environmental Inequality: Self-Regulation or Pollution Shelter?," Sustainability, MDPI, vol. 16(16), pages 1-23, August.
    2. Feng Xiong & Yaxin Shao & Haotian Fan & Yi Xie, 2023. "Analysis of the Motivation behind Corporate Social Responsibility Based on the csQCA Approach," Sustainability, MDPI, vol. 15(13), pages 1-29, July.
    3. Wu, Bao & Fang, Chevy-Hanqing & Wang, Qi & Huang, Qiongxian, 2023. "Does managerial networking impinge our morality in Guanxi context? The moderating effect of corruption perception," Emerging Markets Review, Elsevier, vol. 55(C).
    4. Zhang, Kai & Zhou, Yuehui, 2023. "The Communist Party of China embeddedness in corporate governance and total factor productivity: Evidence from private firms in China," Finance Research Letters, Elsevier, vol. 58(PC).
    5. Yang, Haiyan & Zhang, Shuyuan & Hu, Fang & Yao, Daifei Troy, 2023. "Political conformity and entrepreneurship: Evidence from China," Finance Research Letters, Elsevier, vol. 58(PC).
    6. Gu, Yun & Yang, Zhaohui, 2023. "The more red the greener? How the Communist Party of China's party organizations influences corporate green innovation," Finance Research Letters, Elsevier, vol. 55(PA).
    7. Liu, Feng & Long, Xiao & Dong, Lin & Fang, Mingjie, 2023. "What makes you entrepreneurial? Using machine learning to investigate the determinants of entrepreneurship in China," China Economic Review, Elsevier, vol. 81(C).
    8. Hou, Fei & Shen, Huayu & Wang, Ping & Xiong, Hao, 2023. "Signing auditors' cultural background and debt financing costs," International Review of Financial Analysis, Elsevier, vol. 87(C).

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