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Environmental policy, environmental performance, and financial distress in China: Do top management team characteristics matter?
Author(s) -
Shahab Yasir,
Ntim Collins G.,
Chengang Ye,
Ullah Farid,
Fosu Samuel
Publication year - 2018
Publication title -
business strategy and the environment
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.123
H-Index - 105
eISSN - 1099-0836
pISSN - 0964-4733
DOI - 10.1002/bse.2229
Subject(s) - nexus (standard) , endogeneity , china , financial distress , business , distress , public economics , economics , financial system , political science , psychology , law , econometrics , embedded system , psychotherapist , computer science
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.