Do environmental social controls matter to Australian capital investment decision‐making?

Ross, Donald; Wood, Dorothy

doi:10.1002/bse.622

Cited by 10 publications

(4 citation statements)

References 25 publications

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“…() reveal that competitive motivations and management commitments are the most important factors explaining why firms incorporate environmental issues into their strategic planning process. Ross and Wood () found that regulations and stakeholder opinions are among the most important environmental controls (namely mandatory disclosure, regulations, subsidies and stakeholder opinion) perceived by Australian capital investment managers. Considering the two extreme positions of environmental reactivity and environmental proactivity by firms found in prior studies, stakeholder pressure is indicated as important in encouraging the development of proactive environmental strategies (González‐Benito and González‐Benito, ).…”

Section: Literature Reviewmentioning

confidence: 99%

Government Engagement, Environmental Policy, and Environmental Performance: Evidence from the Most Polluting Chinese Listed Firms

2013

Bus Strat Env

186

122

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This study empirically examines the implementation of environmental policies and how government engagement impacts on a firm's environmental performance based on a sample of Chinese listed firms in the eight most polluting industries over a 10-year period. The findings of the study demonstrate that government engagement, measured as ownership structure, is positively correlated with environmental performance, measured by environmental capital expenditure, for state-owned firms, but no significant relation is found for non-state-owned firms. In addition, non-state-owned firms are more likely to perform better in terms of environmental investment after the 2006 enactment of a new policy explicitly linking environmental issues with political incentives to regional governments. This study also reports that corporate environmental performance impairs firm value for state-owned firms but has no impact on firm value for non-state-owned firms, suggesting that investors negatively respond to environmental investments made by state-owned firms as a result of government engagement/political pressure. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment. Keywords: government engagement; political pressure; environmental policy; policy implementation; environmental performance Introduction T HIS STUDY EMPIRICALLY EXAMINES HOW GOVERNMENT ENGAGEMENT, REPRESENTED BY OWNERSHIP STRUCTURE,impacts the environmental performance, as measured by environmental capital expenditure, of firms in the eight most polluting industries in China over a 10-year period. We particularly examine the implementation of environmental policies and how policy enactment affects the corporate environmental behavior of firms. In addition, this study investigates whether environmental investments made by listed firms are recognized by market investors. Business Strategy and the Environment Bus. Strat. Env. 24, 1-19 (2015) Published online 22 August 2013 in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002DOI: 10. /bse.1802 Our research is motivated by a stream of previous studies focusing on stakeholder engagement and public policies relating to environmental issues (e.g. Delmas and Toffel, 2004;González-Benito and González-Benito, 2010;Gouldson and Sullivan, 2007) and exploring the effects of pressure from various stakeholders regarding environmental protection and the implementation of public policies. While business constantly interacts with various stakeholders and societal actors such as governments, civil society and organizations (Mathis, 2007), and all stakeholders jointly influence the environmental decisions and actions of firms, the government is considered the most important stakeholder in that public policies set by governments impose a tremendous amount of pressure on firms (Steurer, 2010;Delmas and Toffel, 2004;Delmas, 2002). However, these studies typically look at the developed world in which there exists a well-organized legal and political mechanism, while little, if any, attention has been paid to emerging market...

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Section: Literature Reviewmentioning

confidence: 99%

Government Engagement, Environmental Policy, and Environmental Performance: Evidence from the Most Polluting Chinese Listed Firms

2013

Bus Strat Env

186

122

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“…Studies have generally pointed out that government regulation is one of the most critical factors influencing corporate environmental policies [2,[7][8][9][10][11]14,15,26,[30][31][32][33][34][35]. For example, in an analysis of EU CDP data by Sakhel [33], companies were mostly exposed to regulatory risk than disaster or market risk, among the risks related to climate change.…”

Section: Chinese Climate Change Action and Its Iinfluencementioning

confidence: 99%

Government Environmental Pressure and Market Response to Carbon Disclosure: A Study of the Early Chinese ETS Implementation

et al. 2021

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We studied how companies’ carbon disclosures affect the cost of capital under the Chinese government’s introduction of the Emissions Trading Scheme (ETS) regulation. We also tested how much the effect varied between state-owned and private enterprises, and between polluting and non-polluting industries. Since, at its early stage, the market may perceive signals and implementations of environmental regulation as a cost burden, the effect of environmental disclosure, which is traditionally known to reduce the cost of capital, may be different. Using a comprehensive index through content analysis and targeting companies in China’s pilot ETS regions between 2011 and 2016, our study showed the following test results. First, for the companies in regions where the ETS regulation was introduced, while carbon disclosure was below a certain level, disclosure raised the cost of capital, and after carbon disclosure was sufficiently high, disclosure decreased the cost of capital. Second, this inverted-U-shaped relationship appeared in non-state-owned enterprises only, and state-owned enterprises showed a traditional linear relationship that disclosure lowers the cost of capital. Third, this non-linear relationship was statistically significant only in the non-heavy pollution industries. This study contributes to the literature in that there are limited studies on the market effects of China’s early introduction of the ETS regulation.

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“…For instance, Delmas (2002) shows that government act as a coercive force in the adoption of environmental management standards ISO 14001 in Europe and the USA, thus sending a clear signal of their endorsement of ISO 14001 by enhancing the adopters' reputation. Consistently, Ross and Wood (2008) conducted a survey of 1000 investment managers in Australia, and documented that environmental regulation and stakeholder opinion are perceived as the most important environmental determinants of capital investment decisions by investment managers. Lanjouw and Mody (1996) provided international evidence on environmental policy and environmental innovations using data from the USA, Germany and Japan, thus reporting that severe environmental regulations stimulate innovation of environmental responsive technology within firms.…”

Section: Institutional Backgroundmentioning

confidence: 99%

The impact of top management’s environmental responsibility audit on corporate environmental investment: evidence from China

Zeng

Zhang²,

2020

SAMPJ

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Purpose The purpose of this paper is to examine the effect of top management’s environmental responsibility audit (ERA) implementation on firms’ investment for environmental protection in China. Design/methodology/approach The sample comprises firms publicly traded on A-Share in China from 2011 to 2017. The authors used the ordinary least squares regression model to test the relation between ERA implementation and corporate environmental investment. Findings Firms’ environmental investment increases significantly after the ERA implementation. Compared to state-owned enterprises (SOEs), non-state-owned enterprises (non-SOEs) are more likely to increase their environmental investment after ERA implementation. Moreover, such change is more likely for non-heavily polluting enterprises (non-HPEs) compared to heavily polluting enterprises (HPEs). Practical implications This paper provides an in-depth analysis of the positive influence of environmental enforcement on corporate behavior, which could serve as reference for regulators on the latest environmental accounting practice in China and other emerging economies. Social implications This paper shows that clear assignment of environmental responsibility and subsequent assessment of environmental performance are contributing factors to effective and efficient implementation of an environmental management system. Originality/value Contributing to accounting and environmental management literature, this paper explains how mandated environmental audit incentivizes firms to deal with environmental issues. Because there is no prior research concerning the mandatory implementation of environmental audit in China, this paper is of high-innovatory value by providing a better understanding of environmental auditing and providing an economic explanation for government intervention as an effective means of mitigating environmental degradation in emerging economies.

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Do environmental social controls matter to Australian capital investment decision‐making?

Cited by 10 publications

References 25 publications

Government Engagement, Environmental Policy, and Environmental Performance: Evidence from the Most Polluting Chinese Listed Firms

Government Engagement, Environmental Policy, and Environmental Performance: Evidence from the Most Polluting Chinese Listed Firms

Government Environmental Pressure and Market Response to Carbon Disclosure: A Study of the Early Chinese ETS Implementation

The impact of top management’s environmental responsibility audit on corporate environmental investment: evidence from China

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