Related party transactions and corporate environmental responsibility




Choi, Wonseok
Chung, Chune Young
Rabarison, Monika K.
Wang, Kainan

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We examine the effect of related party transactions on corporate environmental responsibility and find that firms with more related party transactions tend to have more controversial environmental reports, less emissions reduction, and less environmental expenditures. This relationship is more significant for firms with a high investment-cash flow sensitivity and those with a low ESG score. Overall, the results corroborate the hypothesis that the marginal costs of corporate environmental responsibility outweigh the benefits for financially constrained firms, thus deterring these firms from engaging in corporate environmental responsibility activities.


Article originally published in Finance Research Letters, 46, 102490. English. Published online 2022.
Post-print under embargo until May 2024


Corporate environmental responsibility, Pollution emission, Related party transaction, Internal capital market, Corporate governance


This is a post-print version of an article that is available at Recommended citation: Choi, W., Chung, C. Y., Rabarison, M. K., & Wang, K. (2022). Related party transactions and corporate environmental responsibility. Finance Research Letters, 46, 102490. This item has been deposited in accordance with publisher copyright and licensing terms and with the author’s permission.