Contingent Decision of Corporate Environmental Responsibility Based on Uncertain Economic Policy

Abstract

Using 522 nonfinancial listed companies on the Chinese A-share Market during 2008–2016 as the sample, this paper studies the discretion of corporations to fulfill their environmental responsibilities in the face of economic policy uncertainty (EPU) through a panel regression model and a panel quantile regression model. Additionally, the sample is classified and the heterogeneity is analyzed based on the equity nature, the financing constraints and the economic region in which the corporations are located. The conclusions are as follows. First, faced with EPU, the corporations are willing to actively undertake environmental responsibilities, but their marginal propensity to these responsibilities shows a downward trend. Second, under the premise of EPU, the decision-making behavior of different types of corporations to fulfill their environmental responsibilities is heterogeneous, which is embodied in the equity nature, financing constraints and economic region. Third, through the stepwise regression method, this paper further studies the impact mechanism, and finds that the enterprise’s leverage ratio plays a partial mediating role in the relationship between EPU and environmental responsibility of nonfinancial corporations. Our paper provides important policy implications for the government. In the process of requiring corporations to fulfill their environmental responsibilities, relevant government organizations should fully consider the impact of EPU on the corporations’ development, and the level of environmental responsibilities should be controlled based on the type of the corporation. We further suggest that the requirement should be imposed on the corporations to disclose high-quality and reliable environmental protection information. Finally, we recommend that the corporations should adhere to the route of sustainable development.

Can Mandatory Disclosure Policies Promote Corporate Environmental Responsibility?—Quasi-Natural Experimental Research on China

“…(5) Capital structure, namely asset-liability ratio. The higher the debt ratio is, the greater the debt risk the enterprise assumes, which may limit the cost of environmental protection investment and the effect of technological innovation to a certain extent [ 41 ]. (6) Return on assets.…”

Information and values in the decision-making support: A systematic literature review in the corporate sustainability context

“…Stakeholders can be defined as any group that has relationships with a particular organization, and that can affect and/or be affected by it (Hawrysz & Maj, 2017). Stakeholders are deeply connected to the research question of the present work, since, in addition to influencing organizational decision-making as a whole (Costa et al, 2014), specifically in the context of corporate sustainability, it is argued that an organization it is an integral part of society, and as such, its value is increased by meeting the needs and expectations of all interested parties (Yang et al, 2020). In this understanding, an organization's value creation is influenced by the way in which the desires and concerns of the various stakeholders are addressed (Bolis et al, 2021).…”

“…Also, in the first macro-process, the organization's sustainability practices, among which the most mentioned are: Fair trade, Voluntary disclosure, Employment insertion of marginalized groups, Environmental risk management policies, and Mechanisms to protect minority shareholders (Cucari et al, 2017;Lock & Schulz-Knappe, 2019;Yang et al, 2020) can assume, based on the rationale used in its implementation, two antagonistic approaches: (i) "Anthropocentric Focus" and (ii) "Dimensions of sustainability".…”

“…The presentation of sustainability information is recommended using simple, clear, accessible and understandable language for all information users (Li et al, 2021;Parra-Domínguez et al, 2021;Vieira, 2014). Additionally, it is argued that a good information strategy can make investors adopt different rationales in relation to their decisions (Yang et al, 2020). An example of this refers to the research by Elliot et al (2016) who found that less numbered investors, defined as those with less processing capacity and interpretation of numerical data (Krische, 2018), are more likely to invest in a company, that is, have their investment decision-making altered, through an informational strategy that highlights quantitative information in images and words.…”

“…The development of research since then has revealed that new values (Bolis et al, 2021), including informational ones (Esch et al, 2019), have come to be considered by organizations and stakeholders in their decision-making. In this sense, the use of these values has been identified as an evolution in decision-making processes (Yang et al, 2020).…”