Related party transactions and corporate environmental responsibility

Wonseok Choi, Chune Young Chung, Monika K. Rabarison and Kainan Wang

Finance Research Letters, 2022, vol. 46, issue PA

Abstract: We examine the effect of related party transactions on corporate environmental responsibility and find that firms with more related party transactions tend to have more controversial environmental reports, less emissions reduction, and less environmental expenditures. This relationship is more significant for firms with a high investment-cash flow sensitivity and those with a low ESG score. Overall, the results corroborate the hypothesis that the marginal costs of corporate environmental responsibility outweigh the benefits for financially constrained firms, thus deterring these firms from engaging in corporate environmental responsibility activities.

Keywords: Corporate environmental responsibility; Pollution emission; Related party transaction; Internal capital market; Corporate governance (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321004669

DOI: 10.1016/j.frl.2021.102490

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