IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v47y2022ipbs1544612322000502.html
   My bibliography  Save this article

Corporate environmental governance scheme and investment efficiency over the course of COVID-19

Author

Listed:
  • Liu, Haiyue
  • Jiang, Jie
  • Xue, Rui
  • Meng, Xiaofan
  • Hu, Shiyang

Abstract

Taking the COVID-19 outbreak as the exogenous shock, we use quarterly reports of Chinese listed firms to examine whether enhanced environmental governance scheme improves corporate investment efficiency over the course of COVID-19. The results show that after the outbreak, firms with greater environmental governance scheme experience more efficient investments, with this effect being more pronounced in non-state-owned enterprises, firms unlisted as key pollution-monitoring units, and firms with higher financial constraints. The results are robust to a battery of robustness checks. These findings provide new evidence on the importance of environmental governance in reaping economic benefits and resilience during crisis times.

Suggested Citation

  • Liu, Haiyue & Jiang, Jie & Xue, Rui & Meng, Xiaofan & Hu, Shiyang, 2022. "Corporate environmental governance scheme and investment efficiency over the course of COVID-19," Finance Research Letters, Elsevier, vol. 47(PB).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pb:s1544612322000502
    DOI: 10.1016/j.frl.2022.102726
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612322000502
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2022.102726?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Michelle Rodrigue & Michel Magnan & Charles Cho, 2013. "Is Environmental Governance Substantive or Symbolic? An Empirical Investigation," Journal of Business Ethics, Springer, vol. 114(1), pages 107-129, April.
    2. Biddle, Gary C. & Hilary, Gilles & Verdi, Rodrigo S., 2009. "How does financial reporting quality relate to investment efficiency?," Journal of Accounting and Economics, Elsevier, vol. 48(2-3), pages 112-131, December.
    3. Alexandre Garel & Arthur Petit-Romec, 2021. "The Resilience of French Companies to the COVID-19 Crisis," Post-Print hal-03515460, HAL.
    4. Alexandre Garel & Arthur Petit-Romec, 2021. "Investor rewards to environmental responsibility: Evidence from the COVID-19 crisis," Post-Print hal-03204216, HAL.
    5. Sadok El Ghoul & Omrane Guedhami & Hakkon Kim & Kwangwoo Park, 2018. "Corporate Environmental Responsibility and the Cost of Capital: International Evidence," Journal of Business Ethics, Springer, vol. 149(2), pages 335-361, May.
    6. Bae, Kee-Hong & El Ghoul, Sadok & Gong, Zhaoran (Jason) & Guedhami, Omrane, 2021. "Does CSR matter in times of crisis? Evidence from the COVID-19 pandemic," Journal of Corporate Finance, Elsevier, vol. 67(C).
    7. Garel, Alexandre & Petit-Romec, Arthur, 2021. "Investor rewards to environmental responsibility: Evidence from the COVID-19 crisis," Journal of Corporate Finance, Elsevier, vol. 68(C).
    8. Yu-Shan Chen & Shyh-Bao Lai & Chao-Tung Wen, 2006. "The Influence of Green Innovation Performance on Corporate Advantage in Taiwan," Journal of Business Ethics, Springer, vol. 67(4), pages 331-339, September.
    9. Albuquerque, Rui & Koskinen, Yrjo & Yang, Shuai & Zhang, Chendi, 2020. "Love in the Time of COVID-19: The Resiliency of Environmental and Social Stocks," CEPR Discussion Papers 14661, C.E.P.R. Discussion Papers.
    10. Juhyun Jung & Kathleen Herbohn & Peter Clarkson, 2018. "Carbon Risk, Carbon Risk Awareness and the Cost of Debt Financing," Journal of Business Ethics, Springer, vol. 150(4), pages 1151-1171, July.
    11. Robert Pollin & Heidi Garrett-Peltier & James Heintz & Helen Scharber, 2008. "Green Recovery: A Program to Create Good Jobs & Start Building a Low-Carbon Economy," Published Studies peri_report, Political Economy Research Institute, University of Massachusetts at Amherst.
    12. Rui Albuquerque & Yrjo Koskinen & Shuai Yang & Chendi Zhang, 2020. "Resiliency of Environmental and Social Stocks: An Analysis of the Exogenous COVID-19 Market Crash," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 9(3), pages 593-621.
    13. Charles J. Hadlock & Joshua R. Pierce, 2010. "New Evidence on Measuring Financial Constraints: Moving Beyond the KZ Index," Review of Financial Studies, Society for Financial Studies, vol. 23(5), pages 1909-1940.
    14. Karen Palmer & Wallace E. Oates & Paul R. Portney & Karen Palmer & Wallace E. Oates & Paul R. Portney, 2004. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 3, pages 53-66, Edward Elgar Publishing.
    15. Ailie K.Y. Tang & Kee‐hung Lai & T. C. E. Cheng, 2012. "Environmental Governance of Enterprises and their Economic Upshot through Corporate Reputation and Customer Satisfaction," Business Strategy and the Environment, Wiley Blackwell, vol. 21(6), pages 401-411, September.
    16. Huynh, Thanh D. & Nguyen, Thu Ha & Truong, Cameron, 2020. "Climate risk: The price of drought," Journal of Corporate Finance, Elsevier, vol. 65(C).
    17. Gilles Hilary & Gary C. Biddle, 2006. "Accounting Quality and Firm-Level Capital Investment," Post-Print hal-00481720, HAL.
    18. Broadstock, David C. & Chan, Kalok & Cheng, Louis T.W. & Wang, Xiaowei, 2021. "The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China," Finance Research Letters, Elsevier, vol. 38(C).
    19. Alexandre Garel & Arthur Petit-Romec, 2021. "The Resilience of French Companies to the COVID-19 Crisis," Finance, Presses universitaires de Grenoble, vol. 42(3), pages 99-137.
    20. Wan, Daoxia & Xue, Rui & Linnenluecke, Martina & Tian, Jinfang & Shan, Yuli, 2021. "The impact of investor attention during COVID-19 on investment in clean energy versus fossil fuel firms," Finance Research Letters, Elsevier, vol. 43(C).
    21. Ana Espínola-Arredondo & Félix Muñoz-García, 2012. "When do firms support environmental agreements?," Journal of Regulatory Economics, Springer, vol. 41(3), pages 380-401, June.
    22. Robert D. Klassen & Curtis P. McLaughlin, 1996. "The Impact of Environmental Management on Firm Performance," Management Science, INFORMS, vol. 42(8), pages 1199-1214, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nannan Wang & Dengfeng Cui & Chengguo Jin, 2022. "The Value of Internal Control during a Crisis: Evidence from Enterprise Resilience," Sustainability, MDPI, vol. 15(1), pages 1-18, December.
    2. Xiangyuan Ao & Tze San Ong & Boon Heng Teh, 2023. "Corporate Sustainability Development Strategy and Corporate Environmental Governance—The Moderating Role of Corporate Environmental Investments," IJERPH, MDPI, vol. 20(5), pages 1-15, March.
    3. Maha Faisal Alsayegh & Rashidah Abdul Rahman & Saeid Homayoun, 2022. "Corporate Sustainability Performance and Firm Value through Investment Efficiency," Sustainability, MDPI, vol. 15(1), pages 1-13, December.
    4. Qian, Kun & Shi, Bingjie & Song, Yunling & Wu, Hao, 2023. "ESG performance and loan contracting in an emerging market," Pacific-Basin Finance Journal, Elsevier, vol. 78(C).
    5. Lei, Ni & Miao, Qin & Yao, Xin, 2023. "Does the implementation of green credit policy improve the ESG performance of enterprises? Evidence from a quasi-natural experiment in China," Economic Modelling, Elsevier, vol. 127(C).
    6. Zoltán Csedő & József Magyari & Máté Zavarkó, 2022. "Dynamic Corporate Governance, Innovation, and Sustainability: Post-COVID Period," Sustainability, MDPI, vol. 14(6), pages 1-21, March.
    7. Qiang Qiu & Jinyue Yu, 2023. "Impact of independent director network on corporate green innovation: Evidence from Chinese listed companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 3271-3293, November.
    8. Li, Lifang & Qiu, Lexin & Xu, Fangming & Zheng, Xinwei, 2023. "The impact of green credit on firms' green investment efficiency: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    9. Tao, Hu & Zhuang, Shan & Xue, Rui & Cao, Wei & Tian, Jinfang & Shan, Yuli, 2022. "Environmental Finance: An Interdisciplinary Review," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    10. Li, Yulei & Hu, Shiyang & Zhang, Shu & Xue, Rui, 2023. "The Power of the Imperial Envoy: The Impact of Central Government Onsite Environmental Supervision Policy on Corporate Green Innovation," Finance Research Letters, Elsevier, vol. 52(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Qian, Kun & Shi, Bingjie & Song, Yunling & Wu, Hao, 2023. "ESG performance and loan contracting in an emerging market," Pacific-Basin Finance Journal, Elsevier, vol. 78(C).
    2. Yi, Yuyang & Zhang, Zongyi & Xiang, Cheng, 2022. "The value of CSR during the COVID-19 crisis: Evidence from Chinese firms," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
    3. Jing Lu & Kathleen Rodenburg & Lianne Foti & Ann Pegoraro, 2022. "Are firms with better sustainability performance more resilient during crises?," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 3354-3370, November.
    4. Xiangyuan Ao & Tze San Ong & Boon Heng Teh, 2023. "Corporate Sustainability Development Strategy and Corporate Environmental Governance—The Moderating Role of Corporate Environmental Investments," IJERPH, MDPI, vol. 20(5), pages 1-15, March.
    5. Gregory, Richard Paul, 2022. "ESG scores and the response of the S&P 1500 to monetary and fiscal policy during the Covid-19 pandemic," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 446-456.
    6. Zhang, Ning & Zhang, Yue & Zong, Zhe, 2023. "Fund ESG performance and downside risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 86(C).
    7. María‐Florencia Amorelli & Isabel‐María García‐Sánchez, 2023. "Leadership in heels: Women on boards and sustainability in times of COVID‐19," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(4), pages 1987-2010, July.
    8. Giovanni Cardillo & Ennio Bendinelli & Giuseppe Torluccio, 2023. "COVID‐19, ESG investing, and the resilience of more sustainable stocks: Evidence from European firms," Business Strategy and the Environment, Wiley Blackwell, vol. 32(1), pages 602-623, January.
    9. Xu, Nana & Chen, Jiaqi & Zhou, Fangzhao & Dong, Qing & He, Zhifang, 2023. "Corporate ESG and resilience of stock prices in the context of the COVID-19 pandemic in China," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    10. Alberto Barroso del Toro & Laura Vivas Crisol & Xavier Tort-Martorell, 2022. "Comparing the Impacts of Sustainability Narratives on American and European Energy Shareholders: A Multi-Event Study Analysing Reactions to News before and during COVID-19," Sustainability, MDPI, vol. 14(23), pages 1-18, November.
    11. Imen Khanchel & Naima Lassoued & Rym Gargoury, 2023. "CSR and firm value: is CSR valuable during the COVID 19 crisis in the French market?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(2), pages 575-601, June.
    12. Khaled Alsaifi & Marwa Elnahass & Abdullah M. Al-Awadhi & Aly Salama, 2022. "Carbon disclosure and firm risk: evidence from the UK corporate responses to climate change," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(3), pages 505-526, September.
    13. Knetsch, Andreas & Salzmann, Astrid, 2022. "Societal trust and corporate underinvestment," Global Finance Journal, Elsevier, vol. 54(C).
    14. Maria Victoria Uribe Bohorquez & Isabel María García Sánchez, 2023. "Sustainability in times of crisis: Female employment during COVID‐19," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 3124-3139, November.
    15. Chungwon Woo & Yanghon Chung & Dongphil Chun & Seunghun Han & Dukhee Lee, 2014. "Impact of Green Innovation on Labor Productivity and its Determinants: an Analysis of the Korean Manufacturing Industry," Business Strategy and the Environment, Wiley Blackwell, vol. 23(8), pages 567-576, December.
    16. Chenli Yin & Maria Paz Salmador & Dan Li & M. Begoña Lloria, 2022. "Green entrepreneurship and SME performance: the moderating effect of firm age," International Entrepreneurship and Management Journal, Springer, vol. 18(1), pages 255-275, March.
    17. Rüdiger Fahlenbrach & Kevin Rageth & René M Stulz, 2021. "How Valuable Is Financial Flexibility when Revenue Stops? Evidence from the COVID-19 Crisis [The risk of being a fallen angel and the corporate dash for cash in the midst of COVID]," Review of Financial Studies, Society for Financial Studies, vol. 34(11), pages 5474-5521.
    18. Hooi Hooi Lean & Fabio Pizzutilo & Kimberly Gleason, 2023. "Portfolio performance implications of investment in renewable energy equities: Green versus gray," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 2990-3005, November.
    19. Danisman, Gamze Ozturk & Tarazi, Amine, 2024. "ESG activity and bank lending during financial crises," Journal of Financial Stability, Elsevier, vol. 70(C).
    20. Lei, Heng & Xue, Minggao & Liu, Huiling & Ye, Jing, 2023. "Precious metal as a safe haven for global ESG stocks: Portfolio implications for socially responsible investing," Resources Policy, Elsevier, vol. 80(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:47:y:2022:i:pb:s1544612322000502. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.