Abstract
The construction of digital courts is a crucial measure to improve the judicial environment through the deep integration of judicial reform and digital technology. This study examines the impact of the judicial environment on corporate investment in sustainable development programs by exploiting a quasi-natural experiment in China that mandates certain provinces to promote the application of mobile mini courts. Our results show that shocked companies tend to devote more resources to supporting sustainable development. The result is robust to a battery of sensitivity tests. Further analysis suggests that judicial environment enhancement promotes corporate investment in sustainability through increasing firms' litigation risk, improving the protection of property rights, and reducing economic policy uncertainty. Moreover, the heterogeneity results indicate that the positive impact of the judicial environment on corporate investment in sustainability is more pronounced in firms with lower quality of judicial services, a larger size, lower risk preferences, or more significant analysts' forecast errors. In additional tests, we find that the facilitating effect of digital courts is more significant in provinces with less developed economies or higher internet penetration rates. We also find that constructing digital courts can also increase companies' disclosure of information about sustainable projects. Overall, our empirical results contribute to a deeper understanding of the influence of the judicial environment on corporate practices and mainly initiate a thought-provoking insight into how to encourage corporate sustainable behavior.
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.