The driving force in corporate
environmental governance
Turnover of environmental protection
department directors as an indicator
Jun Hu
School of Management, Hainan University, Haikou, China
Wenbin Long
School of Accounting, Guangdong University of Foreign Studies,
Guangzhou, China
Xianzhong Song
School of Management, Jinan University, Guangzhou, China, and
Taijie Tang
Guanghua School of Management, Peking University, Beijing, China
Abstract
Purpose – Due to environmental externalities, micro-enterprises with profit-seeking features do not
develop sufficient motivation for environmental governance. In a fiscally decentralized system, local
environmental protection authorities perform environmental supervision, and the intensity of the
regulations that they implement has an important influence on corporate environmental governance.
Based on the promotion tournament framework, this paper aims to discuss the driving mechanism of
corporate environmental governance using turnover of environmental protection department directors
(EPDDs) as an indicator.
Design/methodology/approach – Using samples of A-share companies listed on the Shanghai and
Shenzhen exchanges from 2007 to 2014, this paper examines the impact of EPDD turnover on corporate
environmental governance and its underlying mechanism.
Findings – The results show that corporate environmental governance exhibits a political periodicity that
changes with the turnover of the EPDD, and the periodicity remains after controlling for the influence of
changes in provincial party secretary and governor. Internal mechanisms analysis indicates that, without
financial independence, local environmental protection departments rely on increasing sewage charges, not
environmental protection subsidies, to promote corporate environmental governance. Further, considering
heterogeneity among officials, it finds that the younger a new EPDD is, the more pronounced the periodicity
of corporate environmental governance. However, there is no significant difference between in-system and
out-system turnover.
Originality/value – In general, this paper describes the mechanisms of corporate environmental
governance from the perspective of political economics, and the results have implications for the potential
Funding: This study is funded by Natural Science Foundation of China (grant number: 71902050),
Humanities and Social Sciences Planning Fund of Ministry of Education of China (grant number:
17YJA630068), Soft Science Project of the Department of Science and Technology of Guangdong
Province (grant number: 2019A101002090), and Fundamental Research Funds for Hainan University
(grand number: kyqd(sk)1905).
Corporate
environmental
governance
253
Received 8 January 2020
Revised 23 February 2020
Accepted 28 February 2020
Nankai Business Review
International
Vol. 11 No. 2, 2020
pp. 253-282
© Emerald Publishing Limited
2040-8749
DOI 10.1108/NBRI-01-2020-0003
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