What Drives or Hinders Corporate Environmental Performance? Evidence from Japan

         
Author Name ENDO Kazumi (Institute for International Policy Studies)
Creation Date/NO. March 2017 17-J-019
Research Project The Role of Intangibles on Productivity Improvement
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Abstract

This study examines determinants of corporate environmental performance (CEP), focusing on four factors: managerial quality, board structure, ownership structure, and family business. Using a unique dataset on management practices, I find that good management leads to green management. In addition, this study indicates that both board size and board composition are positively associated with CEP and confirms the advisory function of the board. While domestic blockholders exert a quiet diplomacy on firms' strategies, foreign blockholders, who are supposed to seek immediate returns, discourage proactive environmental practices. This study also shows that family businesses, which are characterized by owner-management, are not a significant predictor of CEP once the impacts of the above factors have been partialed out. The results suggest that directors are vulnerable to pressure from short-sighted investors, and that this pressure may drive out good management practices and endanger long-term profitability.