Finance Research Seminar – Dr Vu Trinh

Title: Government Officials’ Visits and Ecologically Responsible Practices

Date: 6 November 2024

Time: 13:00 – 14:00

Venue: NUBS.2.03

If you would like to attend, please register using the following link:

Government Officials’ Visits and Ecologically Responsible Practices

Speaker:  Dr Vu Trinh

Dr Vu Trinh, Newcastle University Business School https://www.ncl.ac.uk/business/people/profile/vutrinh.html

Abstract

We examine the impact of government officials’ corporate site visits on firms’ ecologically responsible practices, as reflected in their environmental investments and performance. Drawing from theoretical insights of managerial attention-based views, we propose that government officials’ site visits facilitate effective communication, and thus can significantly reduce information asymmetry between local governments and firm executives concerning the former’s enforcement of state environmental policies. As a result, these visits are expected to increase executives’ attention towards making substantial environmental investment decisions. Using data on environmental investments by heavily polluting Chinese firms between 2013 and 2018, a period marked by nationwide attention to ecological issues, we find robust evidence that firms tend to increase spending on environmental protection activities in response to more frequent site visits by government officials. However, this positive effect is diminished in firms with a politically connected chairman and in regions where local governments have strong regulatory oversight capabilities. Additionally, adequate environmental subsidies from local governments positively moderate the impact of officials’ site visits on firms’ willingness to engage in environmental activities.