Abstract
The increasingly serious destruction of the natural environment represents a great threat to the sustainable development of human beings and the earth. Under pressure from the government and public opinion, companies must assume environmental responsibility; however, there is no conclusion on whether corporate environmental responsibility is beneficial to companies. From the perspective of investment efficiency, this paper collects panel data from Chinese listed companies from 2011 to 2016 to discuss the impact of corporate environmental responsibility on investment efficiency and the moderating role of the institutional environment and consumer environmental awareness. The results show that corporate environmental responsibility can significantly positively affect investment efficiency, but this effect is not a short-term effect; it needs time to play a role. Second, in regions with a good institutional environment, corporate environmental responsibility has a more significant impact on improving investment efficiency. Finally, with the improvement of consumer environmental awareness, companies that assume environmental responsibility can address underinvestment. The research in this paper supports stakeholder theory, indicating that corporate environmental responsibility is not “selfless dedication”. In addition, the research results of this paper are robust and not subject to endogenous influences.
Highlights
Corporate environmental responsibility (CER), as an area of corporate social responsibility (CSR), refers to an enterprise’s active reduction of environmentally adverse behaviors and participation in environmentally beneficial activities in its daily business activities [1,2]
Based on the above speculation, we propose the first hypothesis of this paper: Hypothesis 1. (H1) The CER of the lag period can improve investment efficiency and reduce investment inefficiency
The remaining variables of the estimation Model (2) are the control variables that may affect the investment efficiency, which are defined as follows: Tobin’s Q (TOB_Q) is represented by company growth opportunities; free cash flow (Cash) is expressed as the ratio of cash flow generated from business activities to total assets; leverage (LEV) is given as the ratio of long-term liabilities to total assets; the size (Size) of the company is expressed as the natural logarithm of the total assets; and the loss (LOSS) of an enterprise is a virtual two-valued variable
Summary
Corporate environmental responsibility (CER), as an area of corporate social responsibility (CSR), refers to an enterprise’s active reduction of environmentally adverse behaviors and participation in environmentally beneficial activities in its daily business activities [1,2]. CER can improve the natural environment and form positive externalities to benefit enterprises and provide better access to external financing, improving corporate financial transparency to some extent and reducing the abuse of corporate free cash flow. Regions with better institutional environments have less corruption, less excessive government intervention (for example, officials interfere in the allocation of corporate resources for their own benefit), and more developed financial markets, all of which are conducive to improving the environmental performance of enterprises and giving full play to the effect of CER. Our results help enterprises and government regulators better understand the effects and working conditions of CER and contribute to policy formulation and corporate managers’ investment decisions in environmental responsibility activities. The structure of this paper is as follows: Section 2 presents a literature review; Section 3 shows the model design and data; Section 4 offers the empirical results; and Section 5 provides the conclusion
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