Abstract
Using a sample consisting of China’s listed manufacturing companies which issue A-shares on the Shenzhen and Shanghai stock exchanges from 2008–2014, this study empirically tests the relationship between board chairman’s political connections and the amount of energy conservation and emission reduction investment. The results show that the existence of politically-connected board chairmen positively affects green investment. In addition, marketization degrees negatively moderate the relationship between political connection and green investment, which supports an institutional logic perspective. The amount of redundant resources also has the same moderating effect, which is consistent with the resource exchange perspective.
Highlights
China’s economy has achieved rapid development since the reform and opening-up policy in 1978
Along with the development of the literature, this paper explores the relationship between a corporate governance variable and the amount of energy conservation and emission reduction investment (ECERI)
We focus on one specific corporate governance mechanism called political connection since it is very common and plays an important role in China’s listed companies
Summary
China’s economy has achieved rapid development since the reform and opening-up policy in 1978. China has witnessed various problems, such as wasting resources and air pollution To deal with these problems, China’s manufacturing enterprises have been encouraged to implement green practice, such as energy conservation and emission reduction in recent years. We adapt the second definition and test how board chairman’s political connection, which is one of corporate governance variables, affects green investment (ECERI). Due to the existence of these two channels, we can argue that listed companies with politically-connected board chairmen will invest more in ECERI. We open the black box of China’s manufacturing enterprises’ green governance by analyzing the relationship between board chairmen’s political connection and the amount of ECERI and the channels through which political connection can impact ECERI.
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