Journal of Business Ethics

, Volume 140, Issue 3, pp 381–402 | Cite as

Corporate Environmental Responsibility: A Legal Origins Perspective

Article
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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 
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Notes

Acknowledgments

We are grateful for the helpful comments and suggestions from Iljonng Kim, Jiyoung Kim, Jeongsim Kim, Taeha Kim, Heonjae Song, Heejin Yang, Dongwoo Yoo, and all seminar participants of the CFE-CSR forum. This work was supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-2014S1A5B8060964).

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Copyright information

© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  1. 1.School of Economics and ManagementSouthwest Jiaotong UniversityChengduP.R. China
  2. 2.College of BusinessKorea Advanced Institute of Science and TechnologySeoulRepublic of Korea
  3. 3.College of EconomicsSungkyunkwan UniversitySeoulRepublic of Korea

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