Corporate governance & the environment: bad discretion, good discretion, and environmental (...)
This paper brings two important topics of corporate environmental management and corporate governance by exploring the impact of various governance mechanisms on the level of environmental performance that is realized by firms. We hypothesize that anti-takeover amendments and provisions that restrict managersÂ´ personal liability create a sphere of "bad" discretion that allows managers to shirk by underinvesting in potentially financially beneficial levels of environmental performance. We suggest that corporate governance structures that emphasize higher levels of performance pay and lower degrees of monitoring create a degree of "good" discretion that enhances environmental firm performance.
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