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Corporate governance & the environment: bad discretion, good discretion, and environmental (...)

Author

Listed:
  • Juan Santaló

    (Instituto de Empresa)

  • CARL KOCK

    (Instituto de Empresa)

Abstract

This paper brings two important topics of corporate environmental management and corporate governance by exploring the impact of various governance mechanisms on the level of environmental performance that is realized by firms. We hypothesize that anti-takeover amendments and provisions that restrict managers´ personal liability create a sphere of "bad" discretion that allows managers to shirk by underinvesting in potentially financially beneficial levels of environmental performance. We suggest that corporate governance structures that emphasize higher levels of performance pay and lower degrees of monitoring create a degree of "good" discretion that enhances environmental firm performance.

Suggested Citation

  • Juan Santaló & CARL KOCK, 2005. "Corporate governance & the environment: bad discretion, good discretion, and environmental (...)," Working Papers Economia wp05-24, Instituto de Empresa, Area of Economic Environment.
    • Handle: RePEc:emp:wpaper:wp05-24
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    Keywords

    Corporate governance; Corporate environmental performance; Managerial discretion;
    All these keywords.

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