Corporate Environmental Responsibility: A Legal Origins Perspective

Hakkon Kim (), Kwangwoo Park () and Doojin Ryu ()
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Hakkon Kim: Southwest Jiaotong University
Kwangwoo Park: Korea Advanced Institute of Science and Technology
Doojin Ryu: Sungkyunkwan University

Journal of Business Ethics, 2017, vol. 140, issue 3, No 2, 402 pages

Abstract: Abstract In this study, we examine the determinants of corporate environmental responsibility (CER), as well as the relationship between legal systems and CER as measured by a unique set of global environmental cost data. Results of our analyses show that firms’ legal origins affect CER, which requires a long-term management perspective. Specifically, our results indicate that civil law firms exhibit significantly higher levels of CER than common law firms. In addition, results of an auxiliary test suggest that manager shareholding has a significant, nonlinear relationship with CER. The association between a firm’s legal origin and its CER performance remains robust after controlling for the effects of managerial ownership and issues related to endogeneity. Our findings imply that although the majority of corporate law studies in the past few decades provide support for the common law system emphasizing the maximization of shareholder value and investor protection, the civil law system stressing the maximization of stakeholder wealth and the importance of CER may become more influential in the coming decades as CER becomes central to firms’ operations.

Keywords: Legal origins; Corporate environmental responsibility (CER); Managerial ownership (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (51)

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DOI: 10.1007/s10551-015-2641-1

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