Purpose - This paper examines the impact of being a chaebol or non-chaebol affiliated firm, managerial ability, and ownership concentration on a firm’s environmental performance.
Design/Methodology/Approach - We estimate empirical models using samples of Korean public firms from 2012 to 2018. We use chaebol, managerial ability, and ownership concentration as our main variables of interest, and use environmental scores from KEJI index as our dependent variable.
Findings - We document that chaebol affiliated firms show better corporate environmental performance compared to non-chaebol firms. We find no relationship between managerial ability and environmental performance for chaebol firms, while we report a positive relationship between the two for non-chaebol firms. Empirical results suggest a negative relationship between ownership concentration and environmental performance regardless of chaebol or non-chaebol firms. Lastly, we do not draw a conclusion for the interaction effect between managerial ability and ownership concentration on environmental performance for chaebol firms due to mixed results, while we find a negative interaction effect between the two on environmental performance for non-chaebol firms. Our results are robust with the alternative environmental performance measurement from KCGS and decile ranked managerial ability measurements.
Research Implications - We provide additional empirical evidence such that managerial ability and ownership concentration influence environmental performance in the Korean context. Also, we document that chaebol affiliated firms show higher environmental performance compared to non-chaebol firms, which could be applicable to family-owned firms in other countries. Furthermore, we provide empirical evidence to support the notion that manager tenures and operational choices are interrelated. We believe that this study provides implications to policymakers in the environmental sector.