IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v11y2019i17p4512-d259393.html
   My bibliography  Save this article

Impact of Corporate Environmental Responsibility on Investment Efficiency: The Moderating Roles of the Institutional Environment and Consumer Environmental Awareness

Author

Listed:
  • Shihong Zeng

    (Applied Economics Department, College of Economics and Management, Beijing University of Technology, Beijing 100124, China
    Beijing City Sub-Center Institute, Beijing University of Technology, Beijing 100124, China
    Finance and Economics Development Research Center, College of Economics and Management, Beijing University of Technology, Beijing 100124, China
    Beijing Modern Manufacturing Development Research Base of Beijing Philosophy and Social Sciences, Beijing University of Technology, Beijing 100124, China)

  • Yujia Qin

    (Applied Economics Department, College of Economics and Management, Beijing University of Technology, Beijing 100124, China
    Finance and Economics Development Research Center, College of Economics and Management, Beijing University of Technology, Beijing 100124, China)

  • Guowang Zeng

    (Applied Management and Computer Science, Management Department, LUISS University, 00197 Rome, Italy)

Abstract

The increasingly serious destruction of the natural environment represents a great threat to the sustainable development of human beings and the earth. Under pressure from the government and public opinion, companies must assume environmental responsibility; however, there is no conclusion on whether corporate environmental responsibility is beneficial to companies. From the perspective of investment efficiency, this paper collects panel data from Chinese listed companies from 2011 to 2016 to discuss the impact of corporate environmental responsibility on investment efficiency and the moderating role of the institutional environment and consumer environmental awareness. The results show that corporate environmental responsibility can significantly positively affect investment efficiency, but this effect is not a short-term effect; it needs time to play a role. Second, in regions with a good institutional environment, corporate environmental responsibility has a more significant impact on improving investment efficiency. Finally, with the improvement of consumer environmental awareness, companies that assume environmental responsibility can address underinvestment. The research in this paper supports stakeholder theory, indicating that corporate environmental responsibility is not “selfless dedication”. In addition, the research results of this paper are robust and not subject to endogenous influences.

Suggested Citation

  • Shihong Zeng & Yujia Qin & Guowang Zeng, 2019. "Impact of Corporate Environmental Responsibility on Investment Efficiency: The Moderating Roles of the Institutional Environment and Consumer Environmental Awareness," Sustainability, MDPI, vol. 11(17), pages 1-21, August.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:17:p:4512-:d:259393
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/11/17/4512/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/11/17/4512/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hannah Santos & Gustavo Lannelongue & Javier Gonzalez-Benito, 2019. "Integrating Green Practices into Operational Performance: Evidence from Brazilian Manufacturers," Sustainability, MDPI, vol. 11(10), pages 1-18, May.
    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. 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.
    4. Hsu, Chu-Chuan & Lee, Jen-Yao & Wang, Leonard F.S., 2017. "Consumers awareness and environmental policy in differentiated mixed oligopoly," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 444-454.
    5. Jeong Eun Sim & Bosung Kim, 2019. "Commitment to Environmental and Climate Change Sustainability under Competition," Sustainability, MDPI, vol. 11(7), pages 1-20, April.
    6. Deng, Xin & Kang, Jun-koo & Low, Buen Sin, 2013. "Corporate social responsibility and stakeholder value maximization: Evidence from mergers," Journal of Financial Economics, Elsevier, vol. 110(1), pages 87-109.
    7. Joëlle Vanhamme & Adam Lindgreen & Jon Reast & Nathalie Popering, 2012. "To Do Well by Doing Good: Improving Corporate Image Through Cause-Related Marketing," Journal of Business Ethics, Springer, vol. 109(3), pages 259-274, September.
    8. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    9. Paramati, Sudharshan Reddy & Alam, Md Samsul & Apergis, Nicholas, 2018. "The role of stock markets on environmental degradation: A comparative study of developed and emerging market economies across the globe," Emerging Markets Review, Elsevier, vol. 35(C), pages 19-30.
    10. Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    11. Cai, Yiyong & Newth, David & Finnigan, John & Gunasekera, Don, 2015. "A hybrid energy-economy model for global integrated assessment of climate change, carbon mitigation and energy transformation," Applied Energy, Elsevier, vol. 148(C), pages 381-395.
    12. Myers, Stewart C, 1984. "The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-592, July.
    13. Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
    14. Cutillas Gomariz, Mª Fuensanta & Sánchez Ballesta, Juan Pedro, 2014. "Financial reporting quality, debt maturity and investment efficiency," Journal of Banking & Finance, Elsevier, vol. 40(C), pages 494-506.
    15. Kyoungwon Mo & Kyung Yun (Kailey) Lee, 2019. "Analyst Following, Group Affiliation, and Labor Investment Efficiency: Evidence from Korea," Sustainability, MDPI, vol. 11(11), pages 1-19, June.
    16. Nandy, Monomita & Lodh, Suman, 2012. "Do banks value the eco-friendliness of firms in their corporate lending decision? Some empirical evidence," International Review of Financial Analysis, Elsevier, vol. 25(C), pages 83-93.
    17. Mansour, Walid, 2014. "Information asymmetry and financing constraints in GCC," The Journal of Economic Asymmetries, Elsevier, vol. 11(C), pages 19-29.
    18. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    19. Schill, Marie & Godefroit-Winkel, Delphine & Diallo, Mbaye Fall & Barbarossa, Camilla, 2019. "Consumers’ intentions to purchase smart home objects: Do environmental issues matter?," Ecological Economics, Elsevier, vol. 161(C), pages 176-185.
    20. Mark P. Sharfman & Chitru S. Fernando, 2008. "Environmental risk management and the cost of capital," Strategic Management Journal, Wiley Blackwell, vol. 29(6), pages 569-592, June.
    21. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    22. Chung-Te Ting & Chi-Ming Hsieh & Hsiao-Ping Chang & Han-Shen Chen, 2019. "Environmental Consciousness and Green Customer Behavior: The Moderating Roles of Incentive Mechanisms," Sustainability, MDPI, vol. 11(3), pages 1-16, February.
    23. Mihaela Kardos & Manuela Rozalia Gabor & Nicoleta Cristache, 2019. "Green Marketing’s Roles in Sustainability and Ecopreneurship. Case Study: Green Packaging’s Impact on Romanian Young Consumers’ Environmental Responsibility," Sustainability, MDPI, vol. 11(3), pages 1-12, February.
    24. Muddassar Sarfraz & Wang Qun & Li Hui & Muhammad Ibrahim Abdullah, 2018. "Environmental Risk Management Strategies and the Moderating Role of Corporate Social Responsibility in Project Financing Decisions," Sustainability, MDPI, vol. 10(8), pages 1-17, August.
    25. Samet, Marwa & Jarboui, Anis, 2017. "How does corporate social responsibility contribute to investment efficiency?," Journal of Multinational Financial Management, Elsevier, vol. 40(C), pages 33-46.
    26. Li Cai & Jinhua Cui & Hoje Jo, 2016. "Corporate Environmental Responsibility and Firm Risk," Journal of Business Ethics, Springer, vol. 139(3), pages 563-594, December.
    27. Hyun Min Oh & Woo Young Kim, 2018. "The Effect of Analyst Coverage on the Relationship between Seasoned Equity Offerings and Investment Efficiency From Korea," Sustainability, MDPI, vol. 10(8), pages 1-21, August.
    28. Elisabet Aguado & Adelheid Holl, 2018. "Differences of Corporate Environmental Responsibility in Small and Medium Enterprises: Spain and Norway," Sustainability, MDPI, vol. 10(6), pages 1-13, June.
    29. Bhandari, Avishek & Javakhadze, David, 2017. "Corporate social responsibility and capital allocation efficiency," Journal of Corporate Finance, Elsevier, vol. 43(C), pages 354-377.
    30. Maretno Harjoto & Hoje Jo, 2011. "Corporate Governance and CSR Nexus," Journal of Business Ethics, Springer, vol. 100(1), pages 45-67, April.
    31. Niu, Shih-Yuan & Liu, Chiung-Lin & Chang, Chih-Ching & Ye, Kung-Don, 2016. "What are passenger perspectives regarding airlines' environmental protection? An empirical investigation in Taiwan," Journal of Air Transport Management, Elsevier, vol. 55(C), pages 84-91.
    32. Zhang, Cui, 2017. "Political connections and corporate environmental responsibility: Adopting or escaping?," Energy Economics, Elsevier, vol. 68(C), pages 539-547.
    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. Haiquan Wu & Wenli Liao & Zhifang Zhou & Yi Li, 2021. "Can Financial Constraints and Regulatory Distance Reduce Corporate Environmental Irresponsibility?," Sustainability, MDPI, vol. 13(23), pages 1-25, November.
    2. Sang Koo Kang & Hee Sub Byun, 2020. "Are Corporate Environmental Responsibility Activities an Efficient Investment or an Agency Cost? Evidence from Korea," Sustainability, MDPI, vol. 12(9), pages 1-22, May.
    3. Wei Peng & Baogui Xin & Yekyung Kwon, 2019. "Optimal Strategies of Product Price, Quality, and Corporate Environmental Responsibility," IJERPH, MDPI, vol. 16(23), pages 1-24, November.
    4. Ruiqian Li & Ramakrishnan Ramanathan, 2020. "Can environmental investments benefit environmental performance? The moderating roles of institutional environment and foreign direct investment," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3385-3398, December.
    5. Ruiqian Li & Guanghua Xu & Ramakrishnan Ramanathan, 2022. "The impact of environmental investments on green innovation: An integration of factors that increase or decrease uncertainty," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 3388-3405, November.
    6. Jie Zhou & Shanyue Jin, 2023. "Corporate Environmental Protection Behavior and Sustainable Development: The Moderating Role of Green Investors and Green Executive Cognition," IJERPH, MDPI, vol. 20(5), pages 1-18, February.
    7. Chien-Hsiang Huang & Chih-Wen Ting & Tai-Wei Chang & Yue-Shi Lee & Show-Jane Yen, 2023. "The Impact of Ethical Leadership on Financial Performance: The Mediating Role of Environmentally Proactive Strategy and the Moderating Role of Institutional Pressure," Sustainability, MDPI, vol. 15(13), pages 1-12, July.
    8. Yanhong Yuan & Bowen Zhang & Lei Wang & Li Wang, 2022. "Low-Carbon Strategies Considering Corporate Environmental Responsibility: Based on Carbon Trading and Carbon Reduction Technology Investment," Sustainability, MDPI, vol. 14(11), pages 1-18, May.
    9. Julia Wojciechowska-Solis & Anetta Barska, 2021. "Exploring the Preferences of Consumers’ Organic Products in Aspects of Sustainable Consumption: The Case of the Polish Consumer," Agriculture, MDPI, vol. 11(2), pages 1-17, February.
    10. Lili Ding & Zhimeng Guo & Yuemei Xue, 2023. "Dump or recycle? Consumer's environmental awareness and express package disposal based on an evolutionary game model," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 6963-6986, July.
    11. Guiyu Bai & Delin Meng, 2022. "Assessing Influence Mechanism of Management Overconfidence, Corporate Environmental Responsibility and Corporate Value: The Moderating Effect of Government Environmental Governance and Media Attention," IJERPH, MDPI, vol. 20(1), pages 1-19, December.
    12. Jin Zhang & Lianrui Ma & Jinkai Li, 2021. "Why Low-Carbon Publicity Effect Limits? The Role of Heterogeneous Intention in Reducing Household Energy Consumption," Energies, MDPI, vol. 14(22), pages 1-17, November.
    13. An-Jin Shie & You-Yu Dai & Ming-Xing Shen & Li Tian & Ming Yang & Wen-Wei Luo & Yenchun Jim Wu & Zhao-Hui Su, 2022. "Diamond Model of Green Commitment and Low-Carbon Travel Motivation, Constraint, and Intention," IJERPH, MDPI, vol. 19(14), pages 1-21, July.
    14. Camila Gramkow & Annela Anger-Kraavi, 2019. "Developing Green: A Case for the Brazilian Manufacturing Industry," Sustainability, MDPI, vol. 11(23), pages 1-16, November.
    15. Ionel-Sorinel Vasilca & Madlena Nen & Oana Chivu & Valentin Radu & Cezar-Petre Simion & Nicolae Marinescu, 2021. "The Management of Environmental Resources in the Construction Sector: An Empirical Model," Energies, MDPI, vol. 14(9), pages 1-19, April.
    16. Liu Yang & Han Qin & Quanxin Gan & Jiafu Su, 2020. "Internal Control Quality, Enterprise Environmental Protection Investment and Finance Performance: An Empirical Study of China’s A-Share Heavy Pollution Industry," IJERPH, MDPI, vol. 17(17), pages 1-15, August.
    17. Muyao Li & Jinsong Zhang & Ramakrishnan Ramanathan & Ruiqian Li, 2020. "Opening the Black Box: The Impacts of Environmental Regulations on Technological Innovation," IJERPH, MDPI, vol. 17(12), pages 1-18, June.
    18. Mingyao Cao & Keyi Duan & Haslindar Ibrahim, 2023. "Local Government Debt and Its Impact on Corporate Underinvestment and ESG Performance: Empirical Evidence from China," Sustainability, MDPI, vol. 15(14), pages 1-18, July.
    19. Suyon Kim & Jaehong Lee, 2020. "Accounting Treatment of R&D for Environmentally Responsible Firms: Evidence from South Korea," Sustainability, MDPI, vol. 12(8), pages 1-16, April.
    20. Svetlana Ignjatijević & Jelena Vapa Tankosić & Nemanja Lekić & Duško Petrović & Sandra Brkanlić & Bojan Vapa & Vladimir Tomašević & Nikola Puvača & Radivoj Prodanović & Irena Milojević, 2022. "Agro-Environmental Practices and Business Performance in the Wine Sector," Agriculture, MDPI, vol. 12(2), pages 1-21, February.

    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. Samet, Marwa & Jarboui, Anis, 2017. "How does corporate social responsibility contribute to investment efficiency?," Journal of Multinational Financial Management, Elsevier, vol. 40(C), pages 33-46.
    2. Kim, Taeyeon & Kim, Hyun-Dong & Park, Kwangwoo, 2020. "CEO inside debt holdings and CSR activities," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 508-529.
    3. Karim Ben Khediri, 2021. "CSR and investment efficiency in Western European countries," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(6), pages 1769-1784, November.
    4. Mohammed Benlemlih & Mohammad Bitar, 2018. "Corporate Social Responsibility and Investment Efficiency," Journal of Business Ethics, Springer, vol. 148(3), pages 647-671, March.
    5. Tran, Ly Thi Hai, 2022. "Reporting quality and financial leverage: Are qualitative characteristics or earnings quality more important? Evidence from an emerging bank-based economy," Research in International Business and Finance, Elsevier, vol. 60(C).
    6. Bo-Hung Chiou & Shen-Ho Chang, 2020. "Influence of Investment Efficiency by Managers and Accounting Conservatism on Idiosyncratic Risks to Investors," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 10(1), pages 1-8.
    7. Xin Qu & Majella Percy & Fang Hu & Jenny Stewart, 2022. "Can CEO equity‐based compensation limit investment‐related agency problems?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(2), pages 2579-2614, June.
    8. Erkan, Asligul & Nguyen, Trung, 2021. "Does inside debt help mitigate agency problems? The case with investment inefficiency and payout policies," Finance Research Letters, Elsevier, vol. 39(C).
    9. Rana El Bahsh & Ali Alattar & Aziz N. Yusuf, 2018. "Firm, Industry and Country Level Determinants of Capital Structure: Evidence from Jordan," International Journal of Economics and Financial Issues, Econjournals, vol. 8(2), pages 175-190.
    10. Chen, Ruiyuan & El Ghoul, Sadok & Guedhami, Omrane & Wang, He, 2017. "Do state and foreign ownership affect investment efficiency? Evidence from privatizations," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 408-421.
    11. Lijuan Xiao & Min Bai & Yafeng Qin & Lingyun Xiong & Lijuan Yang, 2021. "Financial Slack and Inefficient Investment Decisions in China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(4), pages 920-941, June.
    12. Nejla Ould Daoud Ellili, 2020. "Environmental, Social, and Governance Disclosure, Ownership Structure and Cost of Capital: Evidence from the UAE," Sustainability, MDPI, vol. 12(18), pages 1-23, September.
    13. Trung K. Do & Henry Hongren Huang & Te-Chien Lo, 2023. "Does corporate social responsibility affect leverage adjustments?," Review of Quantitative Finance and Accounting, Springer, vol. 60(4), pages 1569-1604, May.
    14. Najah Attig & Sean Cleary & Sadok Ghoul & Omrane Guedhami, 2014. "Corporate Legitimacy and Investment–Cash Flow Sensitivity," Journal of Business Ethics, Springer, vol. 121(2), pages 297-314, May.
    15. Mario Fischer, 2015. "Challenging the payment effect in bank-financed takeovers," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 26(4), pages 347-376, October.
    16. Umme Habiba & Cao Xinbang, 2022. "An Investigation of the Dynamic Relationships Between Financial Development, Renewable Energy Use, and CO2 Emissions," SAGE Open, , vol. 12(4), pages 21582440221, November.
    17. Bhuyan, Md Nazmul Hasan & Subedi, Meena & Akter, Maimuna, 2022. "CEO-friendly boards and seasoned equity offerings," Journal of Behavioral and Experimental Finance, Elsevier, vol. 36(C).
    18. Chen, Tao & Xie, Lingmin & Zhang, Yuanyuan, 2017. "How does analysts' forecast quality relate to corporate investment efficiency?," Journal of Corporate Finance, Elsevier, vol. 43(C), pages 217-240.
    19. Mohammed Benlemlih & Li Cai, 2020. "Corporate environmental performance and financing decisions," Post-Print hal-03124950, HAL.
    20. Hail Jung & Seyeong Song & Chang-Keun Song, 2021. "Carbon Emission Regulation, Green Boards, and Corporate Environmental Responsibility," Sustainability, MDPI, vol. 13(8), pages 1-12, April.

    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:gam:jsusta:v:11:y:2019:i:17:p:4512-:d:259393. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.