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THE IMPACT OF ENVIRONMENTAL SUSTAINABILITY INITIATIVES ON MANAGERS’ RESEARCH AND DEVELOPMENT DECISIONS

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Abstract
I examine how managers’ involvement in their firm’s environmental sustainability initiative influences their research and development (R&D) decisions. Further, I investigate whether such an effect is moderated by the presence of an environmental sustainability expenditure disclosure in the firm’s financial statements. Consistent with self-perception theory, I find that managers with high (versus low) involvement in their firm’s initiative demonstrate less myopia in their R&D decisions, but only when their firm discloses its environmental sustainability expenditures. I also find that this interactive effect on managers’ R&D decisions is mediated by managers’ beliefs about how financial statement users view them and by how managers view themselves. My study is informative to managers and boards of directors as firms democratize their environmental sustainability initiatives and to standard setters as they consider mandating disclosures related to environmental expenditures (SEC 2022).
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Dissertation (Campus Access - 5 Years)
Date
2023-05
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