Premium
Corporate environmental performance and financing constraints: An empirical study in the Chinese context
Author(s) -
Liu Zhenjie,
Li Weian,
Hao Chen,
Liu Huan
Publication year - 2020
Publication title -
corporate social responsibility and environmental management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.519
H-Index - 73
eISSN - 1535-3966
pISSN - 1535-3958
DOI - 10.1002/csr.2073
Subject(s) - legitimacy , stock exchange , corporate finance , business , capital market , event study , government (linguistics) , context (archaeology) , finance , stock market , instrumental variable , politics , economics , econometrics , paleontology , linguistics , philosophy , political science , law , biology
Between 2006 and 2017, 2,965 Chinese firms listed on the Shanghai/Shenzhen Stock Exchange have been studied to investigate whether better corporate environmental performance (CEP) leads to better access to capital and mitigates firms' financing constraints. It is hypothesized that better access to finance can be attributed to the increased government support due to enhanced firm political legitimacy and market legitimacy. Event studies find that the firms with better CEP suffer significantly lower finance constraints, and the evidence from the studies proves that firms' political legitimacy and market legitimacy are important in mitigating finance constraints. The results of the studies are confirmed by using two alternative measures of capital constraints and CEP, an instrumental variable approach, and a simultaneous equations approach.