Business groups and environmental violations: evidence from China
Business groups and environmental violations: evidence from China
Although, in the modern era, stakeholders put pressure on firms to engage in environmental friendly practices, yet collaborative arrangements in the shape of business group affiliations may prove a double-edged sword. Accordingly, this study examines the impact of such collaborative arrangements on firm's environmental violations. On one hand, this affiliation can better pursue environmental policies and regulations because of their higher political or social visibility and reduce environmental infractions. Conversely, higher political legitimacy may derive from engaging in environmental violations. Using a unique sample from China comprising 6,860 firm-year observations over the 2010 to 2020 time period, we find that business group affiliation increases environmental violations, implying that stronger political legitimacy provides them relaxation in strictly following environmental regulations in comparison to standalone firms. We also find that this nexus is more pronounced when the affiliated firms have poor shareholder and board monitoring. These findings are helpful for policymakers/regulators concerning the initiative's evaluation regarding sustainable development and ecological protection.
Business groups, environmental violations, political legitimacy, board monitoring
Shahab, Yasir
b7753ae4-760a-447f-9895-10269f5dfca3
Hussain, Tanveer
02a1ffe0-bde3-41cc-866d-7b857472a139
Wang, Peng
9496fb0a-1c17-4b6b-a755-aedf19bb83e5
Zhong, Ma
1e0521dc-6770-4e3f-8e9a-be3d9bbfca62
Kumar, Satish
435e3a33-21ba-4038-9e5e-7b7b958189a1
29 November 2022
Shahab, Yasir
b7753ae4-760a-447f-9895-10269f5dfca3
Hussain, Tanveer
02a1ffe0-bde3-41cc-866d-7b857472a139
Wang, Peng
9496fb0a-1c17-4b6b-a755-aedf19bb83e5
Zhong, Ma
1e0521dc-6770-4e3f-8e9a-be3d9bbfca62
Kumar, Satish
435e3a33-21ba-4038-9e5e-7b7b958189a1
Shahab, Yasir, Hussain, Tanveer, Wang, Peng, Zhong, Ma and Kumar, Satish
(2022)
Business groups and environmental violations: evidence from China.
International Review of Financial Analysis, 85, [102459].
(doi:10.1016/j.irfa.2022.102459).
Abstract
Although, in the modern era, stakeholders put pressure on firms to engage in environmental friendly practices, yet collaborative arrangements in the shape of business group affiliations may prove a double-edged sword. Accordingly, this study examines the impact of such collaborative arrangements on firm's environmental violations. On one hand, this affiliation can better pursue environmental policies and regulations because of their higher political or social visibility and reduce environmental infractions. Conversely, higher political legitimacy may derive from engaging in environmental violations. Using a unique sample from China comprising 6,860 firm-year observations over the 2010 to 2020 time period, we find that business group affiliation increases environmental violations, implying that stronger political legitimacy provides them relaxation in strictly following environmental regulations in comparison to standalone firms. We also find that this nexus is more pronounced when the affiliated firms have poor shareholder and board monitoring. These findings are helpful for policymakers/regulators concerning the initiative's evaluation regarding sustainable development and ecological protection.
Text
IRFA2022 accepted manuscript
- Accepted Manuscript
Restricted to Repository staff only until 26 November 2024.
Request a copy
More information
Accepted/In Press date: 24 November 2022
e-pub ahead of print date: 26 November 2022
Published date: 29 November 2022
Keywords:
Business groups, environmental violations, political legitimacy, board monitoring
Identifiers
Local EPrints ID: 473544
URI: http://eprints.soton.ac.uk/id/eprint/473544
ISSN: 1057-5219
PURE UUID: 930673ca-7360-4870-85e0-118b00f3e2f3
Catalogue record
Date deposited: 23 Jan 2023 17:41
Last modified: 17 Mar 2024 03:37
Export record
Altmetrics
Contributors
Author:
Yasir Shahab
Author:
Tanveer Hussain
Author:
Ma Zhong
Author:
Satish Kumar
Download statistics
Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.
View more statistics
