Environmental policy, environmental performance, and financial distress in China: Do top management team characteristics matter?. (3rd September 2018)

• Record Type: Journal Article
• Authors: Shahab, Yasir; Ntim, Collins G.; Chengang, Ye; Ullah, Farid; Fosu, Samuel
• Is Part Of: Business strategy and the environment. Volume 27:Number 8(2018)
• Page Start: 1635
• Page End: 1652
• Publication Date: 2018-09-03
• Subjects: business strategy and financial distress -- China -- environmental management and performance -- environmental policy -- risk management perspective -- TMT characteristics -- upper echelons perspective; Industrial management -- Environmental aspects -- Periodicals; Industries -- Environmental aspects -- Periodicals; 658.4083
• DOI: 10.1002/bse.2229
• Languages: English
• ISSNs: 0964-4733

Abstract

Abstract: 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.