“Leviathan Inc. and Sustainability: State-ownership and Environmental Engagement”

Po-Hsuan Hsu, The University of Hong Kong

While state-ownership is criticized for weaker governance and less efficiency, its existence may internalize negative externalities and encourage environmental initiatives. Our empirical study based on public firms in 45 countries suggests that state-owned companies are more active in environmental engagement. Such a pattern is more pronounced among firms in manufacturing industries, firms in emerging countries, and firms in countries with lower energy independence and greater conflict with neighbor states. A causal interpretation of our findings is supported by a difference-in-difference test based on Copenhagen Accord signed in December 2009.