Electoral system, corporate political donation, and carbon emission intensity: Cross‐country evidence

Mohammad Muttakin, Dessalegn Getie Mihret and Tarek Rana

Business Strategy and the Environment, 2021, vol. 30, issue 4, 1767-1779

Abstract: We examine the association between a country's electoral system and greenhouse gas (GHG) emission intensity of firms and explore whether this association is influenced by corporate political donation. The study draws on the neo‐pluralist theory of power in society to examine how possible corporate influence in the electoral systems relates to corporate environmental performance. Using a cross‐country panel dataset, we find that companies operating in countries using majoritarian electoral systems (MAJ), where corporations have a relatively low influence on election outcomes, are associated with lower GHG emission intensity than those in proportional electoral systems, after controlling for macro‐economic factors and variations in firm characteristics. Further, our findings show that corporate political donation positively moderates the association between MAJ and GHG emission intensity. Our results suggest that corporations are likely to utilise political donations as a component of business strategy to ease the regulatory actions of the state on companies. The results are robust to alternative variable measurements and tests of sensitivity.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:bla:bstrat:v:30:y:2021:i:4:p:1767-1779

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