TY - JOUR
T1 - Related party transactions and corporate environmental responsibility
AU - Choi, Wonseok
AU - Chung, Chune Young
AU - Rabarison, Monika K.
AU - Wang, Kainan
N1 - Funding Information:
This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.
Publisher Copyright:
© 2021 Elsevier Inc.
PY - 2022/5
Y1 - 2022/5
N2 - 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.
AB - 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.
KW - Corporate environmental responsibility
KW - Corporate governance
KW - Internal capital market
KW - Pollution emission
KW - Related party transaction
UR - http://www.scopus.com/inward/record.url?scp=85116474574&partnerID=8YFLogxK
U2 - 10.1016/j.frl.2021.102490
DO - 10.1016/j.frl.2021.102490
M3 - Article
AN - SCOPUS:85116474574
SN - 1544-6123
VL - 46
JO - Finance Research Letters
JF - Finance Research Letters
M1 - 102490
ER -