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Environmental performance and corporate risk-taking: Evidence from China

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  • Zhu, Danyu
  • Gao, Xin
  • Luo, Zijun
  • Xu, Weidong

Abstract

This study investigates the relationship between environmental performance and corporate risk-taking in China. Using the sample from China between 2010 and 2016, we find that corporate risk-taking is negatively associated with their environmental performance. Compared to non-state-owned firms, this association is more pronounced in state-owned firms. More equity incentives, higher independent director proportion, and higher institutional ownership are found to weaken this relationship. We further document that active environmental behavior (e.g. mature environmental management and more green innovation) alleviate this negative relationship. These conclusions remain valid after a series of robustness tests and endogeneity tests.

Suggested Citation

  • Zhu, Danyu & Gao, Xin & Luo, Zijun & Xu, Weidong, 2022. "Environmental performance and corporate risk-taking: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:pacfin:v:74:y:2022:i:c:s0927538x22001068
    DOI: 10.1016/j.pacfin.2022.101811
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    Cited by:

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    4. Wei‐jian Li & Wei Zhu & Bin Wang, 2023. "The impact of creating shared value strategy on corporate sustainable development: From resources perspective," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(5), pages 2362-2384, September.

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    More about this item

    Keywords

    Environmental performance; Corporate risk-taking; Quiet life hypothesis;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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