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Environmental performance and corporate risk-taking: Evidence from China

Danyu Zhu, Xin Gao, Zijun Luo and Weidong Xu

Pacific-Basin Finance Journal, 2022, vol. 74, issue C

Abstract: This study investigates the relationship between environmental performance and corporate risk-taking in China. Using the sample from China between 2010 and 2016, we find that corporate risk-taking is negatively associated with their environmental performance. Compared to non-state-owned firms, this association is more pronounced in state-owned firms. More equity incentives, higher independent director proportion, and higher institutional ownership are found to weaken this relationship. We further document that active environmental behavior (e.g. mature environmental management and more green innovation) alleviate this negative relationship. These conclusions remain valid after a series of robustness tests and endogeneity tests.

Keywords: Environmental performance; Corporate risk-taking; Quiet life hypothesis (search for similar items in EconPapers)
JEL-codes: G31 G38 M14 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.pacfin.2022.101811

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