Abstract
In this study, we examine various effects of carbon emission regulation enacted in South Korea. We provide empirical evidence of regulated firms strategically hedging against potential risks by increasing the number of directors with environment-related backgrounds. We also find that this relationship is clearly evidenced when the firm is owned by a lower proportion of foreign investors. Further analysis shows that these directors successfully change their firms to become environmentally friendly. Overall, we conclude that the role of governments in promoting green finance is crucial. The findings of this study may be used as a guideline for decision makers and environmental policymakers to create systems and policies to increase the firm’s awareness about the environment in relation to corporate environmental responsibility (CER) ratings of firms.
Highlights
Environmental Responsibility.Being environmentally responsible is becoming more important for sustainable growth at both firm and national levels
We employ a logistic regression and pooled ordinary least squares (OLS) estimation method to test for the relation between the environmental regulation and the board diversity
Thereafter, we use propensity score matching (PSM) to match the potential effects of endogeneity
Summary
Environmental Responsibility.Being environmentally responsible is becoming more important for sustainable growth at both firm and national levels. To effectively reduce greenhouse gases (GHGs), the South. Korean government enacted a comprehensive law that compels all firms, regardless of their financial status, to disclose their GHG emission to the public if it exceeded 125,000; 87,500; and 50,000 tons of carbon dioxide equivalent (tCO2 -eq) in 2011, 2012, and 2014, respectively. The South Korean government enacted the Framework Act on Low-Carbon, Green Growth in 2010, whereby, in accordance with Article 42 (6), the Minister of Environment issued comprehensive policy measures as the Principles of Target Management for Greenhouse. The law is established to regulate and reduce firms’ GHG emissions. Regulated firms are exposed to a number of risks, for example, disclosing previously confidential information about their emissions and their manufacturing details to third parties may result in negative environmental publicity
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.