How does ownership structure affect corporate environmental responsibility? Evidence from the manufacturing sector in China

Abstract

Corporate environmental responsibility (CER) has strong positive externalities that affect the environment. State-owned enterprises (SOEs) are more likely to devote their resources to CER-related activities to meet the expectations of their ultimate controlling owner (the government). However, previous studies neither explain the transmission mechanism of government ownership on CER nor analyze the differences in such effect between government ownership and non-government ownership (including foreign and private ownership). Therefore, this research discusses the heterogeneous impact of ownership structure on the CER of Chinese manufacturing firms. Results show that government ownership positively influences CER, with the effect being stronger for central government ownership than for local government ownership. Meanwhile, compared with private ownership, foreign ownership has a stronger positive effect on CER. However, the effect of foreign ownership is weaker than that of government ownership on CER. Furthermore, a larger separation of ownership and control inhibits the CER of SOEs yet facilitates that of foreign firms.