Top managers' environmental experience and corporate environmental violations: Evidence from China

Jinting Dong, Bin Liu and Yinying Chen

International Review of Financial Analysis, 2024, vol. 95, issue PB

Abstract: This study examines the effect of top managers' environmental experience on corporate environmental violations. We find that top managers' environmental experience is negatively associated with the likelihood and frequency of corporate environmental violations in China. Our conclusions are robust after addressing the potential endogeneity problems through matched-sample analyses and the difference-in-differences approach. Furthermore, the mechanism analyses show that top managers with environmental experience reduce corporate environmental violations by improving firms' environmental awareness, environmental expertise, and resources. Moreover, we find that the negative association between top managers' environmental experience and corporate environmental violations is more pronounced when firms face lower corporate governance pressure or when firms are subject to weaker government environmental governance pressure. Finally, we find that shareholders react much more positively to the appointment announcements of top managers with environmental experience, suggesting that the stock market does value top managers' environmental experience. Our findings offer important implications by showing that it is helpful to hire top managers with environmental experience to improve firms' environmental sustainability, which could be important for other emerging markets, which, like China, are facing increasing environmental deterioration.

Keywords: Environmental experience; Top managers; Environmental violations; Corporate environmental sustainability; China (search for similar items in EconPapers)
JEL-codes: G32 M12 M14 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:95:y:2024:i:pb:s105752192400382x

DOI: 10.1016/j.irfa.2024.103450

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