Abstract
This paper explores the effects and mechanisms of corporate financialization on corporate environmental responsibility (CER), using panel regression and the panel quantile regression model. The data is from 484 Chinese A-share non-financial listed companies, over the period 2008–2015. Some valuable results were achieved, as follows. Firstly, corporate financialization has a significantly negative impact on CER. We attribute this fact to the hard constraint of shareholder value maximization and the soft constraint of CER by taking an extrinsic analysis. Moreover, this negative impact shows heterogeneity. As the CER level increases, the remarkable restraint taken by the corporate financialization on CER is gradually weakened. This results in the corporation aiming not only at the shareholder value maximization, but also at the social effect, rather than only the former. In addition, the effect of the moderating role played by corporate leverage and ownership concentration in the influence of corporate financialization on the CER is captured in different kinds of corporations, while different performances are shown.
Highlights
The corporation should create the greatest value for shareholders [1]
We present the results of the random effect model estimated by generalized least square estimator and maximum likelihood estimator; the assumption and estimation principle for these three methods are different, if there is a stable relationship between variables, the results should be consistent in theory
The coefficients of corporate leverage ratio and ownership concentration are significant at 1% level and they are negative, which indicates that corporate leverage ratio and ownership concentration have a constraining effect on the implementation of corporate environmental responsibility (CER)
Summary
The corporation should create the greatest value for shareholders [1]. the corporate environmental responsibility (CER) has increasingly attracted more attention from the public. Due to the continuous decline in real economic returns, the corporations invested more funds into the financial departments in order to achieve short-term profits. As the influence and restriction of large shareholders increasing, company management gradually loses its independence in making decisions, and shareholder value maximization becomes an important ideology for corporate governance in China. As the largest overall carbon emitter in the world, China needs to demonstrate its global importance in achieving environmental SDGs. China provides an appropriate setting to investigate the relationship between corporate financialization and CER. As the global economic environment evolves, corporations are inclined to maximize the shareholder value, which results in the significantly negative impact of corporate financialization on CER, provided there are no hard constraints on CER. CWEhReinnto takcionngsiCdEerRatiionnto, wcoenthsiidnekrathtiaotnc,owrpeortahtienckultthuarte cisordpivoerarstee, caunldtuarcecoirsddinivgelyrsteh,eaanwdaraecnceosrsdoinfgcloyrptohreate awbarraenndesdsiffoef rcso, rthpeorreaftoereb,rtahnedredwifofeurlsd, btheehreetfeorroeg, etnheeirtey winotuhledimbepahcettoerfocgoernpeoirtayteinfinthaneciimalipzaacttioonfon corCpEoRra.tSeefcitnioannc4iadliiszcautsiosensothneCmEeRc.hSaencistimonof4tdheisicnuflsuseesncteheofmcoecrphoarnaitsemfinoaf nthciealiinzfaltuioenncoenoCf EcRor.pBoarsaetdeon fintahnecidailsiczuastisoionnoinnCthEeRs.uBba-sseadmopnlesth, we deilsocoukssaitown hinetthheer stuheb-ismampapclteosf, wcoerplooorakteatfiwnahnecthiaelriztahteioinmopnaCctER of wcooruplodrabteehfeintearnocgieanlieziatyt,iothnrooungChEwRhiwchouwlde wbeillhfientedroougtentheeitmy,otdherroautgehvawrihabiclhe iwn ediwffeilrlenfitnsdubo-ustamthpeles. moderate variable in different sub-samples
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