Abstract:This study investigates the role of institutional pressures in corporate environmental responsibility (CER) by testing the interacting effects among cognitive, regulative, and normative pressures at cross levels. Specifically, this research decomposes the cognitive dimension of CER into perceived environmental benefit and perceived ethical obligation to differentiate their mechanisms. The sample is obtained from 212 firms within 34 industrial clusters. Results of two-level regression modeling confirm that regu… Show more
“…Concerning the economic consequences of CER, scholars mainly focus on whether CER can benefit companies (Claydon, 2011). Especially in China, economic‐related cognitive pressure remains the dominant motive for CER (Gao, Gu, & Liu, 2019). However, CER also requires the necessary cost expenditure, which reduces companies' financial performance (Thomas, Repetto, & Dias, 2010).…”
In this study, we aim to investigate the long‐term economic consequences of corporate environmental responsibility (CER) by companies from the perspective of earnings persistence and investors' response. Based on firm‐level data of 1,010 heavily polluting listed companies in China, the empirical results are as follows. First, the CER of China's heavily polluting listed companies has significantly improved their earnings persistence, that is, earnings quality. Second, the positive long‐term economic effect of CER has been achieved through two paths: improving companies' operational efficiency and reducing their credit costs. Third, CER increases investors' response to heavily polluting companies' accounting earnings. Moreover, state‐owned listed companies achieve more significant positive long‐term economic effects from CER than others. The results suggest that heavily polluting companies should correctly identify the long‐term value of CER rather than pay excessive attention to the impact of CER on their current costs and benefits.
“…Concerning the economic consequences of CER, scholars mainly focus on whether CER can benefit companies (Claydon, 2011). Especially in China, economic‐related cognitive pressure remains the dominant motive for CER (Gao, Gu, & Liu, 2019). However, CER also requires the necessary cost expenditure, which reduces companies' financial performance (Thomas, Repetto, & Dias, 2010).…”
In this study, we aim to investigate the long‐term economic consequences of corporate environmental responsibility (CER) by companies from the perspective of earnings persistence and investors' response. Based on firm‐level data of 1,010 heavily polluting listed companies in China, the empirical results are as follows. First, the CER of China's heavily polluting listed companies has significantly improved their earnings persistence, that is, earnings quality. Second, the positive long‐term economic effect of CER has been achieved through two paths: improving companies' operational efficiency and reducing their credit costs. Third, CER increases investors' response to heavily polluting companies' accounting earnings. Moreover, state‐owned listed companies achieve more significant positive long‐term economic effects from CER than others. The results suggest that heavily polluting companies should correctly identify the long‐term value of CER rather than pay excessive attention to the impact of CER on their current costs and benefits.
“…As declared by the DG in presenting the first AOU report: We are approaching the document with the aim to inform citizens with a 360‐degree picture of what we do. The other stakeholder that should be interested is the Region as the financing institution.It is immediately clear that the intention of the DG is to use this document to legitimize his work and therefore respond to a need for legitimacy theory (Albarrak et al, ; De Graaff et al, ; Guthrie & Parker, ; Hummel & Schlick, ; Menicucci & Paolucci, ; Suchman, ) and institutional theory (e.g., Baldini et al, ; Gallego‐Alvarez et al, ; Gao et al, ).…”
Section: Resultsmentioning
confidence: 99%
“…It is also important to consider that organizations are not isolated individual entities, and their behavior is determined by norms, structures, constraints, and the expectations of relevant audiences (Scott, ). This is also why institutional theory has been widely applied to explain the adoption of organizational practices among companies (e.g., Gallego‐Alvarez et al, ; Gao et al, ). The degree of variation in institutions is captured by Scott's () three pillars of institutions: regulative, normative, and cultural cognitive.…”
Section: Theoretical Background: Legitimacy Theory and Institutional mentioning
confidence: 99%
“…Within the current research stream, our purpose is to understand how a public health care organization (PHO) adapts integrated reporting (IR) concepts to its purposes, from the decision to adopt the IRF to the publication of the final integrated report, the reasons behind its implementation, and the stakeholders's opinions about it. We use legitimacy theory (Albarrak, Elnahass, & Salama, ; De Graaff, Steens, & Camfferman, ; Guthrie & Parker, ; Hummel & Schlick, ; Menicucci & Paolucci, ; Suchman, ) and institutional theory (Baldini, Dal Maso, Liberatore, Mazzi, & Terzani, ; Gallego‐Alvarez, Ortas, Vicente‐Villardón, & Álvarez Etxeberria, ; Gao, Gu, & Liu, ) to explain the reasons that drive the company to undertake the journey of IR and cocompare them with the thoughts of the recipients of the document. Do these thoughts on the purpose of the document coincide?…”
Despite the widespread calls for in-depth case studies on adoption of the International Integrated Reporting Council Framework, in practice, it appears to be underexplored, above all in the public sector. Our aim is to explore how and why a public health care organization (PHO) has chosen to adopt the practice of integrated reporting, and we then delve into whether the PHO's perception of the document's value coincides with that of the stakeholders, who are its recipients.Often, society's perception of value can differ considerably from an organization's.Thus, for our research purposes, a case study was examined, adopting a qualitative approach and action research methodology. Our findings demonstrate the centrality of the value created for patients and of the "normative" scenario that takes place during the implementation of an integrated report in a PHO. Moreover, the concept of legitimacy was found to be virtually synonymous with institutionalization.
K E Y W O R D Saction research, case study, institutional theory, integrated reporting, legitimacy theory, public health care organization
“…Therefore, laggard companies will discern an opportunity (through avoiding legitimacy attacks, for instance) for securing their future competitive advantage. When viewed as opportunities and for competitive advantages, investments in environmental actions (Gao, Gu, & Liu, ; Garces‐Ayerbe et al, ; González‐Benito & González‐Benito, 2006), and more so, in proactive environmental strategies are likely (Sharma, ). Based on these arguments, the following hypothesis is proposed:Hypothesis (H1): Laggard companies will invest in proactive environmental strategies in response to higher displays of an ecological sustainability orientation by leading companies in their industry sector .…”
Section: Theoretical Framework and Hypothesesmentioning
In light of the call for companies to abandon current approaches to environmental management, this study adds to the environmental strategy literature and uses the evidence of competitive dynamics among companies to identify a mechanism by which companies invest in proactive environmental strategies and thereby improve the sustainability of the natural environment. An examination utilizing fixed effects regressions on a sample of large U.S.‐based companies reveal that even after controlling the number, environmental and financial performance of leading (environmental) companies, laggard (environmental) companies are more likely to invest in proactive environmental strategies when their leading peers display higher sustainability orientations. Neither the expectation of government regulation nor social movement pressure was found to be influential in this relationship. Therefore, the future dominance of companies' investments in the sustainability of the natural environment will be driven by companies themselves as long as competitive advantages are expected.
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