Since the first Earth Day in 1970, environmental issues have received greater attention from countries around the world and have aroused widespread public awareness about environmental policy [1
]. As the largest emerging economy in the world, China has witnessed remarkable economic progress in the last few decades partly at the expense of environmental degradation. Environmental problems have become an important issue affecting the quality of people’s life and now receive significant attention from the Chinese society [2
]. Companies on one hand receives vital resources from the environment and on the other hand emit waste and air pollutants back to the environment which is one of the key reason for rising environmental pollution. The Chinese Government attaches high importance to the preservation and management of the ecological environment, and has promulgated a series of policies to promote the protection of ecological environment [3
]. However, government is not solely responsible for environment protection, corporate investment in environment friendly activities is also an important tool to reduce environmental pollution. The aim of the enterprise is to use the limited resources to achieve maximum productivity. The literature generally holds that the primary motive of a firm is to pursue economic benefits [4
]. However, the environmental investment requires the corporations to inject funds continuously to buy facilities and advanced technologies so as to ensure environmental protection [5
]. Moreover, environmental investment does not bring the direct economic benefits, hence it is contrary to the profit maximization principle of an enterprise. Therefore, if based on the cost–benefit principle, firm’s environmental investment often lacks initiative [6
The principal-agent theory holds that the separation of ownership and management in modern form of corporation give the company’s decision-making power in the hands of its executives. Hence, the values and personal preferences of the executives profoundly influence the decision-making process of the firm [7
]. According to the upper echelon theory, the values and behavioral preferences of corporate executives are reflected by their demographic characteristics [8
]. Presently, women are playing a considerable role in yet a male dominated business world. They can rely on their knowledge and expertise to participate in the company’s decision-making process. Female executives are also assuming a greater role in management. Hafsi and Turgut [9
] found that board diversity enhances social performance of the firm. Higher representation of females on the board significantly improves the social responsiveness of arts sector firms in Australia [10
]. Gender differences can lead to significant variation in the investment decisions between men and women [11
]. Females are usually more compassionate, pay more attention to ethics, caring for others, and social responsibility [12
]. According to the theory of Feminist Care Ethics, the female executives push the companies to pay more attention to the issues related to corporate social responsibility. In the face of increasingly serious environmental dilemmas, women may take decisions that differ from the mainstream behavior [13
]. As a cost-based undertaking, the environmental investment decision of firms’ management explains their attitude towards corporate social responsibility to a large extent. Li et al. [14
] found that gender diversity on corporate boards can act as a stimulus in the development of an environment policy for firms. Can this unique value orientation of women serve as an impetus for corporate environmental investment decisions?
Taking the Shanghai and Shenzhen A share listed firms in 2008–2016 as a sample, this paper analyzes the association between female executives and corporate environmental investment and reveals the underlying logic behind this phenomenon. The study found that women executives (CEO or Chair) make significantly higher investment in environment protection. Additionally, an increase in the proportion of female directors on board committees also contributed to an increase in corporate environmental investment. Further investigation reveals that this phenomenon exists not only in firms from the polluting industries, but also in firms from non-polluting industries. Women executives of companies from non-polluting industries significantly increased investment for environmental protection despite the fact that such firms face less regulatory pressure relative to their polluting industries counterparts. This implies that the key reason for female executives to increase corporate environmental investment lies in their sense of commitment to social responsibility rather than economic or regulatory considerations. To substantiate this fact, the paper focuses on the role of external factors such as economic benefits of female executives’ investment for environmental protection and the pressure to comply with government regulations [15
]. We find that environmental investment by female executives is not driven by government subsidies. In addition, women executives also increase investment towards environmental protection in the eastern regions of China where the environmental regulations are quite lax. We further investigate the effectiveness of female executives’ investment in curtailing pollutant emissions and find that environmental investment by female executives significantly reduces the SO2
emission, while these results are insignificant in the firms run by the male executives. It proposes that the investment by female executives is well-directed to reduce the environmental pollution. These findings present a strong case that the environmental investment of female executives significantly contribute to the reduction of pollutants thus it can serve as a mean to improve environmental quality. This paper clarifies the influence of gender in Chinese listed companies on environmental investment and postulates that firms can promote the corporate social responsibility consciousness through a more inclusive management team structure.
The innovation of this paper is, first, the past research has focused more on the relationship of gender and social responsibility such as donation expenditures [16
], care for the underclass [17
], firm performance [18
], cash holding [20
], and Innovation [21
]. Although the environmental investment belongs to the category of corporate social responsibility, there is a dearth of literature on gender and social responsibility of senior executives. Wei, Ding, and Kong [23
] investigated the influence of women on the board and corporate environmental investment in China but their work is confined to the impact of female directors on firm’s environmental investment. However, Usually CEO and Chair have a far more influential role in the decision making than the Board members [24
]. Therefore, it is imperative to explore the impact of female as CEO or Chair besides their representation on board committees. Second, this paper makes use of extensive empirical analysis to examine various possible motives other than the perceived social responsibility consciousness of female executives that can influence the environmental investment decisions of an enterprise. Third, the study draws a comparison on the effectiveness of environmental investment by both genders and reveals that contrary to the environmental investment outcome of male executives, the investment activities carried out by the female executives significantly reduces the emission of pollutants. The principal conclusion of this research is that female executives do not merely take environmental related investment as a strategic means of enterprise development, but primarily out of their innate sense of social responsibility to protect the environment, hence they can play an instrumental role in improving the environmental quality.
The rest of the paper is organized as follows: Section 2
entails institutional background and regulatory environment of China. This section also provides the theoretical foundation and the context of the study, which stipulate the basis for hypotheses development; Section 3
constitutes research design, we introduce the sample selection, data sources, model setting, and variable definition under this section; Section 4
furnish results of empirical analysis; and Section 5
concludes the study.
The aim of this study was to examine that whether increased representation of female executives improves environmental investment in Chinese listed companies. Nowadays, with the rise in social status and the level of education of females, the number of female executives in enterprises has increased. Several studies have now been conducted on the gender differences of executives that leads to the difference in decision-making approaches in firms. The empirical results support our first hypothesis and assert that the presence of female executives can indeed promote environmental investment in enterprises. Moreover, the impact of female executives on environmental investment is not influenced by the industry attributes. It suggests that female executives not only make significant environmental investment in the polluting industries but also in the non-polluting industries. These findings maintain that women executives invest in environmental protection based on their inherent sense of social responsibility which is not affected by the industry attributes. We further investigate that whether the female executives favorable attitude towards environmental investment is driven by external factors such as government subsidies or regulatory pressure. The findings refute the conjecture that environmental investment of female executives may be caused to acquire government subsidies. In addition, female executives persist with environmental investment in eastern China where environmental regulations are not very stringent. The previous research contends that environmental investment by the corporate executives may be aimed at availing the economic incentives or to comply with the governmental regulations, thus it may not significantly improve the environment. Hence, our second hypothesis tests the effectiveness of female executive’s investment compare to their male counterparts. The results indicate that contrary to male executives, environmental investment activities carried out by female executives lead to a significant reduction in the emission of pollutants. These findings validate the female executive’s natural inclination towards environmental protection and affirmative attitude to improve the quality of the ecological environment. This paper elucidates the influence of executives’ gender on environmental investment of listed companies in China. Given the increased pressure for environment protection from the government and society, it is imperative to emphasize the role of leadership characteristics and management composition on the corporate social responsibility practices of an enterprise. Hence, the study provides new insights for optimizing management team structure and establishes that increased representation of female executives can significantly improve the environmental quality in China. The study has practical significance for the corporations and the society at large as it not only suggests a way out to improve the environmental quality, but also reaffirm the important role of females in an enterprise. Hence, this evidence can pave the way to eradicate the ‘ceiling effect’ in the promotion process of female executives. However, the findings of this study are limited to the Chinese context. Future studies in this area can examine how the presence of a female executive influences the management and behavioral aspects of an enterprise and corporate risk taking. Moreover, female executives’ willingness to invest in environmental protection activities should also be tested to corroborate these findings in other emerging and advanced economies.