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Environmental performance, sustainability, governance and financial performance: Evidence from heavily polluting industries in China
Author(s) -
Nguyen Thi H.H.,
Elmagrhi Mohamed H.,
Ntim Collins G.,
Wu Yue
Publication year - 2021
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.2748
Subject(s) - nexus (standard) , corporate governance , business , environmental governance , china , resource dependence theory , accounting , legitimacy , sustainability , porter hypothesis , sample (material) , gender diversity , stakeholder , resource (disambiguation) , economics , finance , environmental regulation , public economics , management , politics , political science , ecology , chemistry , chromatography , computer science , law , biology , embedded system , computer network
This study seeks to contribute to the existing business strategy and the environment literature by examining the effect of governance structures on Chinese firms' environmental performance, and consequently ascertain the extent to which the financial performance–environmental performance nexus is moderated by governance mechanisms. Using a sample of Chinese companies from heavily polluting industries over a 5‐year period, our baseline findings suggest that, on average, board size and governing board meetings are positively associated with Chinese firms' environmental performance, whilst board independence and gender diversity have positive, but insignificant association with firms' environmental performance. Our evidence suggests further that the examined internal governance mechanisms have a mixed moderating effect on the link between financial performance and environmental performance. Our findings have important implications for company executives, environmental activists, policy‐makers, and regulators. Our results support insights drawn from agency, resource dependence, stakeholder, and legitimacy theories.