RT Article
T1 Social trust, environmental violations, and remedial actions in China
JF Journal of business ethics
VO 198
IS 3
SP 637
OP 654
A1 Shahab, Yasir
A1 Zhiwei Ye
A1 Liu, Jia
A1 Nadeem, Muhammad
A2 Zhiwei Ye
A2 Liu, Jia
A2 Nadeem, Muhammad
LA English
YR 2025
UL https://ixtheo.de/Record/192524590X
AB The devastating impact of the climate crisis has led many countries to promulgate regulations that hold businesses accountable for their environmental externalities. However, while these formal constraints compel businesses to fulfill their legal obligations, scholars argue that acting in a socially and environmentally responsible way requires more than mere compliance with the law. Accordingly, we provide novel evidence of how the concept of social justice, implicit in society as an informal construct, underpins firms' ethical behavior, compelling them to accept their social responsibilities by reducing their environmental violations, implementing procedures to prevent further infractions, and repairing the breach in social trust that their transgressions have caused by engaging in restorative acts. Based on unique environmental violation and remedial action data from 2007 to 2022 in China, we establish that social trust significantly lowers a firm's propensity to commit further ecological abuses. We also determine that firms in high-trust regions are more likely to undertake remedial actions in the aftermath of an environmental breach. Moreover, cross-sectional analyses reveal that the relationship between social trust and environmental violations is more pronounced for firms that face greater reputational pressure from higher media reporting, analyst coverage, auditing by Big Four auditors, and institutional site visits. This study augments the literature on environmentalism and argues that social trust also shapes corporate ethical behavior in addition to regulatory pressures.
K1 Environmental violations
K1 Irresponsible business practices
K1 K32
K1 M14
K1 Remedial actions
K1 Restorative Justice
K1 social trust
K1 Unethical environmental behavior
K1 Aufsatz in Zeitschrift
DO 10.1007/s10551-024-05818-5