Journal of Business Ethics

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

Corporate Environmental Responsibility: A Legal Origins Perspective

Article

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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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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