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Peer effects on corporate environmental protection: Competition, information cascades or career concerns?

Author

Listed:
  • Liang, Quanxi
  • Li, Qiumei
  • Lu, Meiting
  • Shan, Yaowen
  • Wang, Peipei

Abstract

This study examines peer influence, and its underlying motives, on environmental protection performance. We find consistent evidence of peer effects on environmental protection performance among Chinese firms. When the average environmental protection score of industry peers increases by one point, the focal firm imitates and increases its future environmental score by 5.7%. We find that such peer effects are largely due to information cascades and managerial career concerns. Additional tests show that peer effects are more pronounced among non-state-owned enterprises and firms in low-polluting areas with a high pressure of regional economic growth.

Suggested Citation

  • Liang, Quanxi & Li, Qiumei & Lu, Meiting & Shan, Yaowen & Wang, Peipei, 2024. "Peer effects on corporate environmental protection: Competition, information cascades or career concerns?," Pacific-Basin Finance Journal, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:pacfin:v:84:y:2024:i:c:s0927538x24000647
    DOI: 10.1016/j.pacfin.2024.102313
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    More about this item

    Keywords

    Environmental protection performance; Peer effects; Information cascades; Career concerns;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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