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Corporate environmental responsibility (CER) weakness, media coverage, and corporate philanthropy: Evidence from China

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Abstract

This study investigates the hidden connection between corporate philanthropy and corporate environmental responsibility (CER) weakness. Using a sample of Chinese listed firms in polluting industries and hand-collected data on corporate environmental performance and corporate philanthropy, we show that CER weakness is significantly positively associated with corporate philanthropy, suggesting that corporate philanthropy may be used by environmentally unfriendly firms to mitigate the negative influence of CER weakness and offset pressures from stakeholders. This finding also implies that Chinese enterprises in polluting industries are inclined to engage in greenwashing via the conduit of corporate philanthropy. In addition, media coverage reinforces the positive association between CER weakness and corporate philanthropy. Above results are still valid after controlling for the potential endogeneity between CER weakness and corporate philanthropy.

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Notes

  1. Delmas and Cuerel Burbano (2011) identified four cases based on the relation between a firm’s fulfilling environmental responsibility and the disclosure of environmental performance: (1) A firm fulfills its environmental responsibility better and also fairly discloses its environmental performance (Type 1; a vocal green firm); (2) A firm fulfills its environmental responsibility better but does not fully report its environmental performance (Type 2; a silent green firm); (3) A firm neither fulfills its environmental responsibility nor fairly discloses its environmental performance (Type 3; a silent brown firm); and (4) A firm does not fulfill its environmental responsibility but reports better environmental performance as environmental misconduct (wrongdoing) dressing (Type 4; a greenwashing firm).

  2. The results are not qualitatively changed by deleting the top and bottom 1 %, by no deletion, or by no winsorization.

  3. According to “Report on China’s search engine market,” “Baidu News Search Engine” owns 80.6 % of market share. In fact, the Baidu news has covered more than 1000 news websites and websites of newspapers, magazines, broadcasting, and TV, excluding corporate websites and personal websites.

  4. To control the potential endogeneity between CER weakness and corporate philanthropy, we lag one period for all control variables.

  5. Using other industries (non-polluting industries and industries with the highest 20 % environmental performance) as benchmarks, non-tabulated results show that benchmark industries have significantly lower corporate environmental responsibility weakness (CER_WEAK) and significantly better corporate environmental performance, compared with firms in polluting industries.

  6. Similar results can be found in extant studies such as Gentry and Shen (2013) and Wang and Qian (2011), in which scholars find the asymmetric influence in different subsamples (split by the moderating variables).

  7. Following Larcker and Rusticus (2010), we conduct diagnostic tests to examine whether instrument variables in Model (5) are appropriate. Non-tabulated results show that these variables can satisfy two conditions: (1) they are crucial to influence CER weakness; and (2) they are less likely to be correlated with residuals from Models (2) and (4).

  8. Our dependent variable is CER weakness but Du et al. (2014) used corporate environmental performance as the dependent variable. In this regard, the signs of variables in our study should be opposite to those in Du et al. (2014).

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Acknowledgments

We appreciate constructive comments from John Matthews (the senior editor), two anonymous reviewers, and participants of our presentations at Xiamen University, Anhui University, Ocean University of China, and Shanghai University. Professor Xingqiang Du acknowledges financial support from the National Natural Science Foundation of China (approval number: 71572162; 71072053) and the Key Project of Key Research Institute of Humanities and Social Science in Ministry of Education (approval number: 13JJD790027). Professor Yingjie Du acknowledges financial support from the Youth Project of Humanities and Social Science Research of Ministry of Education (13YJC790022).

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Authors and Affiliations

  1. School of Management, Xiamen University, Xiamen, Fujian, 361005, China

    Xingqiang Du, Yingying Chang, Quan Zeng & Hongmei Pei

  2. School of Management, Shanghai University, Shanghai, 200444, China

    Yingjie Du

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Correspondence to Yingjie Du.

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[1] The authors declare that they have no conflict of interest. [2] This article does not contain any studies with human participants or animals performed by any of the authors. [3] Informed consent was obtained from all individual participants included in the study.

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Table 5 The procedures and descriptive statistics of corporate environmental performance (raw) score
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Du, X., Chang, Y., Zeng, Q. et al. Corporate environmental responsibility (CER) weakness, media coverage, and corporate philanthropy: Evidence from China. Asia Pac J Manag 33, 551–581 (2016). https://doi.org/10.1007/s10490-015-9449-5

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