Employment protection and environmental corporate social responsibility: Evidence from China

Haiming Liu and Yao-Min Chiang

International Review of Financial Analysis, 2024, vol. 92, issue C

Abstract: The paper examines the influence of employment protection on environmental corporate social responsibility (CSR). Our findings demonstrate that employment protection has a negative effect on environmental CSR and green innovation, particularly for financially constrained firms and those with higher agency costs, providing support for the crowding-out hypothesis. Mechanism tests reveal that employment protection reduces operational flexibility and increases the risk of default for firms. Lastly, employment protection promotes the disclosure of CSR information. These findings indicate that CSR may be influenced by agency issues, and increased employment protection leads firms to reduce unnecessary CSR efforts while focusing on cost-effective CSR information disclosure.

Keywords: Employment protection; Corporate social responsibility; Crowding-out hypothesis (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:92:y:2024:i:c:s1057521924000103

DOI: 10.1016/j.irfa.2024.103078

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