Managerial myopia and carbon emission: Evidence from China

Firms play a pivotal role in global warming, while the strategic vision of their managers significantly shapes their carbon emission decisions. This research investigates the impact of managerial myopia on firm-level carbon emission intensity by OLS regression. Using Chinese firm-level data from 200...

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Bibliographic Details
Published in:Pacific-Basin finance journal 2025-04, Vol.90, p.102614, Article 102614
Main Authors: Xie, Xuejing, Gong, Yukai, Cheng, Le
Format: Article
Language:English
Subjects:
Carbon emission intensity
Customer concentration
Energy consumption
Green innovation
Managerial myopia
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Summary:Firms play a pivotal role in global warming, while the strategic vision of their managers significantly shapes their carbon emission decisions. This research investigates the impact of managerial myopia on firm-level carbon emission intensity by OLS regression. Using Chinese firm-level data from 2007 to 2016, our findings indicate that firms exhibit an increase in carbon emission intensity as managerial myopia escalates, with carbon emission intensity rising by 7.67 % for every standard deviation increase in managerial myopia. The results remain robust after conducting several robustness tests, including alternative measures, controlling for additional fixed effects, lagged independent variable, instrumental variable method, propensity score matching, and entropy balancing matching. Green innovation, customer concentration, and energy consumption are important channels through which managerial myopia influences firms' carbon emission intensity. Further evidence suggests that firms with higher financial constraints and poorer operational efficiency are more positively impacted by managerial myopia. However, effective internal governance can reduce the impact of managerial myopia on carbon emission intensity. This study underscores the importance for firms to reduce carbon emissions by enhancing internal governance. •Myopia affects firms’ carbon emission by green R&D activities, customer concentration, and energy consumption.•Myopic managers exert a more significant influence on firms’ carbon emission intensity under different conditions.•This paper reveals that managers' strategic horizon affects firms' sustainable development.
ISSN:0927-538X
DOI:10.1016/j.pacfin.2024.102614