Environmental policy, environmental performance, and financial distress in China: Do top management team characteristics matter?

Yasir Shahab, Collins G. Ntim, Ye Chengang, Farid Ullah, Samuel Fosu

Research output: Contribution to journalArticlepeer-review

82 Citations (Scopus)

Abstract

This study investigates the effect of environmental performance that is driven by good environmental policies, regulations, and management on firm's financial distress and, consequently, ascertains the extent to which top management teams' (TMTs') characteristics can moderate the environmental performance–financial distress nexus in China using 749 firms over the 2009–2014 period (i.e., generating over 3,000 individual observations). Our findings are twofold. First, our results indicate that increased environmental performance that is driven by good environmental policies tends to strategically reduce the extent of firm financial distress. Second, this nexus is moderated by TMT gender diversity, foreign exposure, and political connection. We interpret our findings within neo-institutional, upper echelons, and risk management theoretical perspectives. The findings are robust to the use of alternative measures of financial distress, estimation techniques, and endogeneity problems.

Original languageEnglish
Pages (from-to)1635-1652
Number of pages18
JournalBusiness Strategy and the Environment
Volume27
Issue number8
DOIs
Publication statusPublished - Dec 2018
Externally publishedYes

Keywords

  • China
  • TMT characteristics
  • business strategy and financial distress
  • environmental management and performance
  • environmental policy
  • risk management perspective
  • upper echelons perspective

ASJC Scopus subject areas

  • Business and International Management
  • Geography, Planning and Development
  • Strategy and Management
  • Management, Monitoring, Policy and Law

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