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Corporate governance and business strategies for climate change and environmental mitigation

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  • Raj Aggarwal
  • Sandra Dow

Abstract

Strategic corporate responses to climate change and environmental challenges do not seem to be the primary domain of corporate management. In the short run, such decisions are generally not consistent with executive incentives and often not seen as profit maximizing. Nevertheless, as some climate change responses may indeed be firm value maximizing, such decisions can be expected to reflect the nature of a firm's corporate governance. Based on an analysis of 500 of the largest US firms, we show empirically that this is indeed the case. Specifically, this study documents that institutional ownership and board entrenchment seem to significantly influence climate change and environmental impact mitigation policies of large firms.

Suggested Citation

  • Raj Aggarwal & Sandra Dow, 2012. "Corporate governance and business strategies for climate change and environmental mitigation," The European Journal of Finance, Taylor & Francis Journals, vol. 18(3-4), pages 311-331, April.
  • Handle: RePEc:taf:eurjfi:v:18:y:2012:i:3-4:p:311-331
    DOI: 10.1080/1351847X.2011.579745
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