The effect of corporate environmental responsibility and religiosity on corporate cash holding decisions and profitability

Evidence from the United States' policies for sustainable development

Bibliographic Data

ID12307494
AuthorsChuluunbat Tsendsuren (0000-0003-4710-4264, School of Business and Technology Management, College of Business Korea Advanced Institute of Science and Technology (KAIST) Daejeon Republic of Korea, corresponding author), Prayag Lal Yadav (Korea Advanced Institute of Science and Technology), Seung Hun Han (0000-0003-2406-9734, School of Business and Technology Management, College of Business Korea Advanced Institute of Science and Technology (KAIST) Daejeon Republic of Korea), Seongjae Mun (0000-0003-4284-9603, School of Business Administration, Kyungpook National University Daegu Republic of Korea, corresponding author)
Year2021
Volume29
Issue5
Pages987-1000
Publication date2021-04-09
Open AccessYes
TypeARTICLE
VenueSustainable Development (JOURNAL)
Journal identifiersISSN: 0968-0802 • E-ISSN: 1099-1719
PublisherWiley (PUBLISHER • GB)
DOI10.1002/sd.2189
OpenAlexW3156955158
LanguageEN
Citations received4
References cited73

We use religious background as a proxy for local risk‐taking attitudes and investigate whether geographical variation in religion affects corporate environmental responsibility (CER) with regards to corporate cash policies and profitability. We conjecture that the presence of environmentally conscious firms would be higher in areas with more Catholics relative to Protestants. Study data comprises of the largest publicly traded U.S.‐listed firms of Newsweek's green rankings of 2015–2016. We use green scores and the concentration of Catholic to Protestant population ratio as proxies for CER and religiosity, respectively. We provide robust evidence that corporate environmental practices attenuate the demand for precautionary cash reserves to protect firms from unforeseeable risks. Furthermore, environmentally conscious firms located in high risk‐taking areas gain financial stability and improve profitability, strengthening their CER. The findings provide contributions to risk management literature and document the importance of firms' efforts to harmonize social behavior for sustainable financial policies

Business · Cash · Corporate social responsibility · Economics · Natural resource economics · Population · Profitability index · Proxy (statistics · Public economics · Public relations · Religiosity · Corporate Social Responsibility Reporting · Environmental Sustainability in Business · Islamic Finance and Banking Studies · Law · Accounting · Finance

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