Corporate environmental initiatives in the Chinese context: Performance implications and contextual factors

Hugo KS Lam, Andy Yeung, TCE Cheng, Paul K Humphreys

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49 Citations (Scopus)
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Although a number of studies have been conducted on the relationship between environmental management and firm performance, most of them are conducted in the Western context. Due to the unique social and economic environments in China, the performance implications of environmental management might be quite different in the Chinese context. We examine the impact of corporate environmental initiatives (CEIs) on the market value of firms in China. We find that, in contrast to the findings in the Western context, Chinese investors react negatively to CEI announcements. The negative reaction is more significant when the announcements are related to processes rather than products, and for state-owned enterprises rather than privately-owned corporations. However, there is no difference whether the CEI is self-declared or third-party endorsed. Overall, our research indicates that Chinese investors consider CEIs to be in conflict with shareholder interest. In particular, CEIs in state-owned enterprises might be considered by investors as signals that firms need to sacrifice profits to shoulder more social responsibility.
Original languageEnglish
Pages (from-to)48-56
Number of pages9
JournalInternational Journal of Production Economics
Early online date18 Jun 2016
Publication statusPublished (in print/issue) - 31 Oct 2016


  • corporate environmental initiatives
  • abnormal returns
  • event study
  • China


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