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Corporate social responsibility and the pollution haven hypothesis: evidence from multinationals' investment decision in China

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  • Maoliang Bu
  • Zhibiao Liu
  • Marcus Wagner
  • Xiaohua Yu

Abstract

This paper tests the pollution haven hypothesis by examining the relationship between environmental regulation and foreign investment with consideration of the role of corporate social responsibility, which has so far been neglected. Using multinationals' investment data from China, our results in general support the pollution haven hypothesis that less stringent environmental regulation is more attractive for multinationals to invest in China, but high social responsibility can counteract attractiveness of weak environmental regulation.

Suggested Citation

  • Maoliang Bu & Zhibiao Liu & Marcus Wagner & Xiaohua Yu, 2013. "Corporate social responsibility and the pollution haven hypothesis: evidence from multinationals' investment decision in China," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 20(1), pages 85-99, March.
    • Handle: RePEc:taf:raaexx:v:20:y:2013:i:1:p:85-99
    DOI: 10.1080/16081625.2013.759175
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    1. Wei, Shang-Jin & Wu, Yi, 2001. "Globalization and Inequality: Evidence from within China," CEPR Discussion Papers 3088, C.E.P.R. Discussion Papers.
    2. Dasgupta, Susmita & Huq, Mainul & Wheeler, David, 1997. "Bending the rules : discretionary pollution control in China," Policy Research Working Paper Series 1761, The World Bank.
    3. Shatz, Howard J. & Venables, Anthony J., 2000. "The geography of international investment," Policy Research Working Paper Series 2338, The World Bank.
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    Cited by:

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    4. Maoliang Bu & Marcus Wagner, 2016. "Racing to the bottom and racing to the top: The crucial role of firm characteristics in foreign direct investment choices," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 47(9), pages 1032-1057, December.
    5. Qiuping Chen & Bo Ning & Yue Pan & Jinli Xiao, 2022. "Green finance and outward foreign direct investment: evidence from a quasi-natural experiment of green insurance in China," Asia Pacific Journal of Management, Springer, vol. 39(3), pages 899-924, September.
    6. Yiming Zhuang & Meltem Denizel & Frank Montabon, 2023. "Examining Firms’ Sustainability Frontier: Efficiency in Reaching the Triple Bottom Line," Sustainability, MDPI, vol. 15(11), pages 1-22, May.
    7. Woon Leong Lin & Chin Lee & Siong Hook Law, 2021. "Asymmetric effects of corporate sustainability strategy on value creation among global automotive firms: A dynamic panel quantile regression approach," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 931-954, February.
    8. Stefan Brehm & Jesper Svensson, 2017. "A fragmented environmental state? Analysing spatial compliance patterns for the case of transparency legislation in China," Asia-Pacific Journal of Regional Science, Springer, vol. 1(2), pages 471-493, October.
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    10. Cristina Cruz & Rachida Justo & Martín Larraza-Kintana & Lucía Garcés-Galdeano, 2019. "When Do Women Make a Better Table? Examining the Influence of Women Directors on Family Firm’s Corporate Social Performance," Entrepreneurship Theory and Practice, , vol. 43(2), pages 282-301, March.
    11. Cristina Cruz & Martin Larraza–Kintana & Lucía Garcés–Galdeano & Pascual Berrone, 2014. "Are Family Firms Really More Socially Responsible?," Entrepreneurship Theory and Practice, , vol. 38(6), pages 1295-1316, November.
    12. Ling-Yun He & Hong-Zhen Zhang, 2021. "Spillover or crowding out? The effects of environmental regulation on residents’ willingness to pay for environmental protection," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 105(1), pages 611-630, January.
    13. Woon Leong Lin & Siong Hook Law & W. N. W. Azman‐Saini, 2020. "Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(3), pages 1279-1293, May.
    14. Yun Li & Yingkai Tang & Kun Wang & Qiwei Zhao, 2019. "Environmental Regulation and China’s Regional Innovation Output—Empirical Research Based on Spatial Durbin Model," Sustainability, MDPI, vol. 11(20), pages 1-18, October.
    15. Xu, Yuan & Wu, Yanrui & Shi, Yongli, 2021. "Emission reduction and foreign direct investment nexus in China," Journal of Asian Economics, Elsevier, vol. 74(C).
    16. James J. Cordeiro & Giorgia Profumo & Ilaria Tutore, 2020. "Board gender diversity and corporate environmental performance: The moderating role of family and dual‐class majority ownership structures," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1127-1144, March.
    17. Abdul Rahman Al Natour & Rasmi Meqbel & Salah Kayed & Hala Zaidan, 2022. "The Role of Sustainability Reporting in Reducing Information Asymmetry: The Case of Family- and Non-Family-Controlled Firms," Sustainability, MDPI, vol. 14(11), pages 1-17, May.
    18. Wenbin Long & Le Luo & Hongfeng Sun & Qiqi Zhong, 2023. "Does going abroad lead to going green? Firm outward foreign direct investment and domestic environmental performance," Business Strategy and the Environment, Wiley Blackwell, vol. 32(1), pages 484-498, January.
    19. Guichuan Zhou & Wendi Liu & Liming Zhang & Kaiwen She, 2019. "Can Environmental Regulation Flexibility Explain the Porter Hypothesis?—An Empirical Study Based on the Data of China’s Listed Enterprises," Sustainability, MDPI, vol. 11(8), pages 1-14, April.
    20. Wu, Haoyi & Guo, Huanxiu & Zhang, Bing & Bu, Maoliang, 2017. "Westward movement of new polluting firms in China: Pollution reduction mandates and location choice," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 119-138.
    21. Mujeeb Saif Mohsen Al-Absy & Redhwan Al-Dhamari & Hamid Abdulkhaleq Hasan Al-Wesabi & Khaldoon Albitar, 2024. "Are country-level political uncertainty and power distance important to the CSR-audit report lag nexus? Evidence from the GCC region," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 14(3), pages 483-515, July.

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