Corporate environmental performance (CEP) has been of fundamental interest in scholarly research during the last few decades. However, there is a great deal of disagreement pertaining to the definition, conceptualization, and adequate measurement of CEP. Our study addresses these issues and provides a methodologically rigorous and comprehensive examination of content validity and construct validity. By integrating the available literature on CEP, we derive a parsimonious definition and theoretically sound framework of the focal construct. Drawing on non-aggregated and publicly available data (...) for a sample of 706 firm-years, we test the construct validity of this framework by means of factor analysis. Our results provide evidence for the multidimensional nature of the focal construct. By contrasting our findings with existing measurement approaches in empirical research, we emphasize several deficiencies with regard to the inferences and conclusions yielded in prior research. Future empirical and practically oriented studies can build on our findings and thus provide more stringent results. (shrink)

This study extends previous literature on the association between corporate social responsibility and corporate financial behavior by investigating the influence of corporate environmental performance on the cost of debt. Using a sample of Chinese private-owned firms, we document strong and consistent evidence to show that corporate environmental performance is significantly negatively associated with the interest rate on debt—the proxy for the cost of debt. The findings suggest that lenders applaud better environmental performance. Moreover, internal control attenuates the negative association between (...) corporate environmental performance and the interest rate on debt, implying substitutive effects between corporate environmental performance and internal control on the reduction of interest rates on debt. The results are robust to various sensitivity tests and are still valid after controlling for the potential endogeneity between corporate environmental performance and the interest rate on debt. (shrink)

This study uses the institutional perspective to examine the interaction effects between the subnational institutional context and firm-level parameters on corporate environmental behaviors, based on a unique cross-sectional data set of private firms compiled from three different sources in China. Our results suggest that both enforcement stringency of environmental regulations at the provincial-level and private firms’ foreign ownership negatively affect compensation fees, which are levies charged for firms’ emissions. Enforcement stringency also moderates the firm-level relationship between foreign ownership and compensation (...) fees, but such a cross-level moderating effect holds only for private firms with non-HMT investments. (shrink)

Using firm-level data from the U.S. manufacturing industry, this paper examines the relationship among inventory leanness, structural strategies for supply chains, and the carbon intensities of a firm and its suppliers. We formulate hypotheses on and empirically test whether this internal characteristic and these two structural strategies can influence the intensities of firm-level and supply chain environmental impacts. We examine inventory leanness because it not only reflects a manufacturer’s operational efficiency but also markedly influences manufacturers’ financial performance. We also focus (...) on two closely related structural strategies that can influence the scope and ownership of the supply chain process, resulting in changes in emission allocation and, more importantly, how resources are utilized and shared in a firm. Based on multi-year carbon inventory data from U.S. manufacturing firms, we find that manufacturers with greater inventory leanness and a parsimonious process structure tend to attain lower firm-level and supply chain carbon intensities. (shrink)

This study suggests that unrelated diversification has a positive influence on the probability of fraudulent reporting whereas related diversification has a negative influence on the probability of fraudulent reporting. The strength of the influence of these corporate level strategies is contingent on the moral character of the firm. Unrelated diversification provides opportunity for financial innovation within the firm’s internal capital market, which can result in fraudulent reporting. This is more likely when the moral character of the firm is driven by (...) a conscienceless financial self-interest motive, as implied by the firm’s contempt toward the larger community (in terms of damage inflicted on the interests of people outside the firm). In contrast, related diversification, where product divisions focus on mutual sharing and monitoring of operational activities, can reduce the probability of fraudulent reporting. This is more likely when constituents within the firm view themselves as moral citizens, as implied by the firm’s benevolence toward the larger community. Hence, while unrelated diversification focuses the energies of managers within the firm on financial manipulation, related diversification focuses these energies on productive purposes. (shrink)