Corporate Environmental Responsibility and Firm Risk

Journal of Business Ethics 139 (3):563-594 (2016)
In this study, we examine the relation between corporate environmental responsibility and risk in U.S. public firms. We develop and test the risk-reduction, resource-constraint, and cross-industry variation hypotheses. Using an extensive U.S. sample during the 1991–2012 period, we find that for U.S. industries as a whole, CER engagement inversely affects firm risk after controlling for various firm characteristics. The result remains robust when we use firm fixed effect or an alternative measure of CER using principal component analysis or downside risk measures. To address the concern of endogeneity bias, we use a system equations approach and dynamic system generalized methods of moment regressions, and continue to find that environmentally responsible firms experience lower risk. These findings support the risk-reduction hypothesis, but not the resource-constraint hypothesis, along with the notion that the top management in U.S. firms is generally risk averse and that their CER engagement facilitates their risk management efforts. Our cross-industry analysis further reveals that the inverse CER-risk association mainly comes from the manufacturing sector, whereas in the service sector, CER tends to increase firm risk.
Keywords No keywords specified (fix it)
Categories (categorize this paper)
DOI 10.1007/s10551-015-2630-4
Edit this record
Mark as duplicate
Export citation
Find it on Scholar
Request removal from index
Revision history

Download options

Our Archive

Upload a copy of this paper     Check publisher's policy     Papers currently archived: 38,062
External links

Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library

References found in this work BETA

The Four Faces of Corporate Citizenship.Archie B. Carroll - 1998 - Business and Society Review 100 (1):1-7.

View all 18 references / Add more references

Citations of this work BETA

Add more citations

Similar books and articles

Corporate Environmental Responsibility and Equity Prices.Li Cai & Chaohua He - 2014 - Journal of Business Ethics 125 (4):1-19.
Corporate Responsibility for Environmental Damage.J. Angelo Corlett - 1996 - Environmental Ethics 18 (2):195-207.
Environmental Integrity and Corporate Responsibility.Richard H. Guerrette - 1986 - Journal of Business Ethics 5 (5):409 - 415.


Added to PP index

Total views
21 ( #316,282 of 2,312,817 )

Recent downloads (6 months)
5 ( #151,226 of 2,312,817 )

How can I increase my downloads?

Monthly downloads

My notes

Sign in to use this feature