Corporate Environmental Responsibility Activities Research Articles

How Do Active Firms Implementing Corporate Environmental Responsibility Take Technological Approaches to Environmental Issues? A Resource-Allocation Perspective

In this study, we acknowledge that corporate environmental responsibility (CER) can be implemented in a strategic sense. Given that firms cope with their resource constraints to pursue competitive advantages, firms tend to consider CER activities as a cost they expend rather than a value they invest. This tendency determines the level of investments to develop specific technologies to deal with environmental issues. Accordingly, we conjecture that the level of CER activities (i.e., the extent to which firms engage in various environmental issues) is negatively related to environmental innovation (i.e., the extent to which firms develop environmentally-sound technologies). To test this counterintuitive idea, we sample 623 U.S. public firms between 1996 and 2010 and figure out the relationship between CER and environmental innovation. As a result, we find a trade-off between CER and environmental innovation. In addition, to elaborate the resource-enabling mechanism between CER and environmental innovation, we examine the moderation effects of slack resources (instantiated by current ratios and debt–equity ratio) and find that the moderators show a positive impact on the relationship between CER and environmental innovation. These results suggest that environmental innovation is a dedicated action firms can take for environmental issues and is not automatically derived from their prior CER activities.

Anti-corruption and corporate environmental responsibility: Evidence from China’s anti-corruption campaign

Taking advantage of China’s vigorous anti-corruption campaign implemented in 2013, this study examines the impact of anti-corruption activities on the corporate environmental responsibility (CER) performance of listed Chinese enterprises from 2010 to 2016. The empirical analysis employs a Difference-in-Differences design to identify the causal effect by using the anti-corruption campaign as an exogenous policy shock. Results indicate that China’s unprecedented anti-corruption campaign launched in 2013 significantly improves the CER performance of high-corruption enterprises. Such an effect is most evident for state-owned enterprises, especially local government-owned ones and those in pollution-intensive industries. These results remain after a series of robustness tests. The mechanism results suggest that the promotion effects of the anti-corruption campaign on CER performance can be achieved through environmental regulations, corporate rent-seeking, and innovation behaviors. Moreover, anti-corruption improves the profitability of enterprises, but the effect is significantly offset by increased CER activities.

Related party transactions and corporate environmental responsibility

We examine the effect of related party transactions on corporate environmental responsibility and find that firms with more related party transactions tend to have more controversial environmental reports, less emissions reduction, and less environmental expenditures. This relationship is more significant for firms with a high investment-cash flow sensitivity and those with a low ESG score. Overall, the results corroborate the hypothesis that the marginal costs of corporate environmental responsibility outweigh the benefits for financially constrained firms, thus deterring these firms from engaging in corporate environmental responsibility activities.

Social determinants of sustainability: The imprinting effect of social class background on corporate environmental responsibility

AbstractUsing a large sample of 10,668 small‐ and medium‐sized private Chinese enterprises over the 2006–2014 period, this study investigates the effect of the social class background of entrepreneurs on firm corporate environmental responsibility (CER) activities. The research question is developed using the concepts of imprinting theory. We measure the social class background of entrepreneurs as the level of occupational prestige held by the individual prior to starting a business. Results show that entrepreneurs drawn from the upper and lower social classes show a preference for the pursuit of environmental governance investment strategies. Moderating influences based on political capital and institutional environment are also explored. The theory and findings highlight that the social class background of entrepreneurs has a lasting and varying impact on the CER activities of a firm. The results are robust to a variety of sensitivity tests. The study extends our understanding of how and why enterprise CER behaviour varies, particularly in the context of Chinese private firms, and offers important implications for the task of sustainable development by enterprises.

Are Corporate Environmental Responsibility Activities an Efficient Investment or an Agency Cost? Evidence from Korea

External conditions such as capital market maturity, investor protection levels, and government control over individual firms vary among countries. We posit that such environmental differences could cause differences in corporate environmental responsibility (CER) activities between countries. However, previous studies have mainly focused on developed countries, while studies conducted in emerging countries are limited. We examine the relationship between CER activities and investment inefficiency in firms listed on the Korea Exchange. Specifically, we analyze the incentive of managers’ ex-ante behavior on CERs and further analyze the relationship between these incentives and external evaluations. Using firm-year panel data, we conducted the pooled ordinary least squares (OLS) regression analysis and found the following results. First, the relationship between CERs and investment inefficiency is significantly positive, especially those based on managers’ incentives for overinvestments. Second, the positive relationship between CERs and investment inefficiency is prominent in the subsamples with large free cash flows or low asset efficiency. Third, active CERs reduced corporate value in the overinvestment subsample. Unlike existing literature that focuses on developed countries, our results imply that CERs may have negative effects due to agency problems in emerging countries with immature capital markets. From this arises the academic implication that the evaluation of CERs should be changed according to different capital market environments.

Accounting Treatment of R&D for Environmentally Responsible Firms: Evidence from South Korea

The purpose of this paper is to investigate the relationship between corporate environmental responsibility (CER) and R&D accounting treatment. Using firms listed in the Korea Stock Exchange (KSE) market between the years 2014 and 2018, this study not only investigates this relationship but also expands upon CER activities in various aspects, such as environmental performance strategy, environmental performance organization, and environmental shareholders. Furthermore, the positive association between various CER activities and R&D capitalization is significant in a highly competitive market. This relationship is robust with an alternative measure of CER activities and firm-fixed effects. This result implies that firms participating in CER activities focus on sustainable commercial success, unlike other firms.

The Influence of Corporate Environmental Responsibility on Overinvestment Behavior: Evidence from South Korea

The purpose of this paper is to examine the association between corporate environmental responsibility (CER) activities and investment efficiency as measured by overinvestment, and whether the industry-level competition affects this association. We investigate a sample of 2285 non-financial firms with fiscal year-end in December listed in the Korea Stock Exchange Market for the period of 2013–2018, measuring the investment efficiency by overinvestment model. Using environmental scores from the Korea Corporate Governance Service to measure CER activities, we show that, on average, firms can decrease overinvestment behavior through CER activities in South Korea. Moreover, in firms in a highly competitive market, the negative association between CER activities and overinvestment is pronounced, indicating that strong product market competition are effective in monitoring managerial opportunistic behavior. These results are robust, even after controlling for different setting and alternative CER. These findings also suggest that the relationship between CER and overinvestment appears to be benefit firms that are sound and sustainable and honestly present their financial information.

Corporate Environmental Responsibility Activities and Stock Price Crash Risk

본 연구는 최근 자본시장에서 급격히 대두되는 비재무적 요인인 기업의 환경적 책임(corporate environmental responsibility, CER)이 주가급락위험에 미치는 영향을 국내 최초로 분석한다. 2011년부터 2015년까지 한국거래소 유가증권시장에 상장된 기업을 대상으로 고정효과모형을 통해 실증분석을 실시한다. 분석결과, CER과 주가급락위험의 관계는 유의하지 않았으나, CER의 구성 요소 중 이해관계자 대응 항목의 확대는 주가급락위험을 유의하게 증가시켰다. 이는 주주가치 극대화라는 목적을 갖는 기업이 이해관계자의 이해를 충족시키기 위해 과도한 CER을 이행할 경우 향후 주가급락을 야기할 수 있음을 의미한다. 한편, CER과 주가급락위험의 유의한 양(+)의 관계는 경영자의 재량적 이익조정 가능성이 높거나, 경영능력이 부족한 기업에서 주로 관찰된다. 이는 대리인문제에 대한 우려가 높은 상황에서 수행되는 CER이 부정적인 정보의 은닉 수단으로 악용될 수 있음을 의미한다. 이는 미국시장에서 CER과 주가급락위험의 음(-)의 관계를 보고한 Kim et al.(2014)의 결과와 대조된다. 한국시장에서는 CER의 부정적 기능을 지적하는 기존 연구와 같이 동 활동이 경영자의 사적이익 추구 수단으로 악용될 수 있으며, 결국 주가급락위험의 상승이라는 결과로 주주가치를 훼손할 수 있음을 시사한다. 본 연구는 투자 전략적 관점에서 CER의 부정적 영향력에 대한 구체적 경로를 제시한다는 점에서 실무적 함의가 있다.

Capitalizing on Sustainability: Value of Going Green

We investigate how corporate environmental responsibility (CER) actions affect firm value. We adopt an event studies approach using two narrowly-decided 5-to-4 Supreme Court rulings and show that firms gain value when they are expected to increase their CER activities. The market reactions are larger for firms that are affected to a greater extent by the Court decisions. These return patterns are more pronounced among firms in regions with high levels of social trust. Firms that reduced toxic chemical emissions show positive earnings surprises, higher revenue and profitability, and greater capital inflow from institutional investors with longer horizons. In sum, we present empirical evidence consistent with the market viewing CER as leading to higher firm value.

Corporate Environmental Responsibility Activities, Ownership of Controlling Shareholders, and Firm Value

Purpose - This study suggests hypotheses that extend existing theories by investigating that the benefits of corporate environmental responsibility (CER) activities can be influenced by incentives based on the ownership of controlling shareholders. Design/methodology/approach - This study attempts the multiple regression analysis using samples for Korean listed firms. We analyze the effect of interaction between CER activities and ownership of controlling shareholders on firm value. Findings - We find that CER activities have a significantly positive effect on firm value only in firms with higher ownership of controlling shareholders, but this effect disappears in firms with lower ownership of them. Since the assessment of CER activities in the Korean capital market has recently started, only a relatively short time series of data is available for our analysis. It is expected that the reliability of the research results can be extended if the analysis using more accumulated data is performed in the future. Research implications or Originality - Our results provide policy and practical implications that the controlling shareholders’ incentive for private interests needs to be priorly disciplined to ensure the efficiency of CER activities.

Corporate environmental responsibility and competitiveness: The maquiladora industry of the Mexican northern borderlands

AbstractThis article sustains that competitive advantages can be developed when industries implement corporate environmental responsibility (CER) programs systematically and strategically, as demonstrated by data provided by a case study conducted with maquiladora industries in Ciudad Juárez, on the Mexico–United States border. In that study, organizational theory and studies were combined with qualitative analytical techniques to explore relationships between environmental management programs and competitive advantage indicators such as innovation, corporate image, and cost reduction. The data were collected from semistructured interviews with managers of environmental issues and from the official documents of seven regional maquiladoras. The findings showed a direct relationship between implementation of CER programs and activities with the resulting evolution of competitive advantages. Further analysis shows that it is the systematic and strategic implementation of CER programs as part of an overall managerial strategy that allows for the generation of competitive advantages through the mediation of innovation as a key factor.

Impact of Entrepreneur's Environmental Attitudes on Corporate Environmental Responsibility

The impact of personal characteristics, beliefs, values and attitudes of the entrepreneur on firm's culture and business practices, is substantive. These aspects of the founder coupled with the institutional environment of the firm, affect the investment, efforts and involvement of the firm in a multitude of activities. With regard to activities that impact the natural environment, this paper argues that the environmental attitudes of entrepreneurs have a strong influence on the corporate environmental responsibility (CER) of the firm that are in turn moderated by the need for legitimacy by new entrepreneurial firms. The role of imprinting is examined to understand how founders' attitudes impact their firm's CER activities. A further contribution is the creation of a taxonomy of sub-categories of CER activities that illustrate the level of engagement of the firm.

Corporate Environmental Responsibility (De)Motivated by Status

Why do firms undertake corporate environmental responsibility (CER)? Most CER activities are legally obligated, and firms may fulfill their CER without going beyond legal obligations of CER activit...

기업의 환경적 책임활동이 기업이미지에 미치는 효과: 환경적 책임활동 차원을 중심으로

Different from the past studies, in this study we postulates that the consumers` trust play an essential mediating role in the relationship between the two dimensions (eco-friendly manufacturing, eco-friendly campaign) of corporate environmental responsibility activities and the corporate image. Trust is conceptualized into three different forms: expertise-based trust, benevolence-based trust, and honesty-based trust. A model integrating two dimensions of corporate environmental responsibility, three forms of trust, and the corporate image is tested using data of 374 student and general consumers. The results of data analysis show that the eco-friendly manufacturing positively influences on the expert-based trust and the eco-friendly campaign positively influences on the benevolence-based trust. The Effects of Corporate Environmental Responsibility Activities on Corporate Image: Focusing on Dimension of Environmental Responsibility. However, eco-friendly manufacturing, eco-friendly campaign activities have a significant impact not on the honesty-based trust. Finally, our results indicate that the expert-based trust, the benevolence-based trust, and honesty-based trust have a significant influence on the corporate image. Thus, this study demonstrates that trust indeed plays a mediating role between corporate environmental responsibility and the corporate image.

Corporate environmental responsibility, employer reputation and employee commitment: an empirical study in developed and emerging economies

Employer reputation is relevant not only to attract but also to retain qualified employees. While in the past financial incentives have been the most important instrument, corporate environmental responsibility (CER) is becoming more and more relevant as a determinant for employer attractiveness and employee commitment. On the basis of signaling theory, we conducted an empirical study among 215 firms in China, Germany, India and the USA. Our results reveal that green strategy & culture, green technology & products, green recruitment & evaluation and green communication positively influence the environmental reputation of a company as an employer and in turn employee commitment. The signaling effects of these CER activities are similar in Germany and the USA (developed economies) as well as in China and India (emerging economies). An exception is green communication, which has a more positive effect on environmental reputation in developed economies. We conclude with managerial and theoretical implications as well as recommendations for future research.

Corporate Environmental Responsibility Activities and Earnings Management

Corporate Environmental Responsibility Activities and Earnings Management