Corporate Governance and Firm Environmental Disclosure: In the context of a Family Firm Dominated Economy

Abstract

Grounded on institutional theory, much environmental management research has regarded that corporations would make the same strategic choices when facing common sets of institutional pressures. In this study, we consider corporation's responsiveness to environmental policy and regulation is different and they exhibit heterogeneous strategies depending on its distinct governance mechanism. By focusing on firm environmental disclosure which is a way of corporations voluntary action against climate change issue, we examine how corporate ownership structure and board composition affect corporations heterogeneous environmental strategies, especially in the family firm dominated economy. As a result of the logistic regression analysis with the sample of 241 Korean firms, we find that under the concentrated ownership structure, the foreign and institutional investors and the outside directors play an important role in encouraging firms to actively engage in firm environmental disclosure, while controlling shareholders group has a negative impact on the disclosure. In the current situation where the firms participation is significantly underscored in solving global environmental problems, this study gives meaningful implications for environmental policy makers to design the most effective corporate environmental programs along with theoretical and managerial implications.