Employment protection and environmental corporate social responsibility: Evidence from China
Journal
International Review of Financial Analysis
Journal Volume
92
Date Issued
2024-03
Author(s)
Liu, Haiming
Abstract
The paper examines the influence of employment protection on environmental corporate social responsibility (CSR). Our findings demonstrate that employment protection has a negative effect on environmental CSR and green innovation, particularly for financially constrained firms and those with higher agency costs, providing support for the crowding-out hypothesis. Mechanism tests reveal that employment protection reduces operational flexibility and increases the risk of default for firms. Lastly, employment protection promotes the disclosure of CSR information. These findings indicate that CSR may be influenced by agency issues, and increased employment protection leads firms to reduce unnecessary CSR efforts while focusing on cost-effective CSR information disclosure.
Subjects
Corporate social responsibility | Crowding-out hypothesis | Employment protection
Publisher
Elsevier
Type
journal article