Based on dual principal–agent theory and stakeholder theory, this study examines the effects and interaction mechanisms of vertical interlocking directors between parent companies and subsidiaries on subsidiary environmental responsibility (ER) within business groups (BGs).
This study collects a sample of listed Chinese A-share subsidiaries from 2009 to 2023 and employs ordinary least squares regressions to analyze the data.
The results show that vertical interlocking directors positively influence subsidiary ER. The “facilitating effect” of vertical interlocking directors is particularly pronounced in BGs with low subsidiary autonomy and strong financial health in parent companies. Subsidiaries with greater board gender diversity and media coverage benefit more from the “facilitating effect” of vertical interlocking directors on subsidiary ER. The primary transmission mechanisms through which vertical interlocking directors impact subsidiary ER include supervising environmental certification, conducting environmental training and enhancing transparent sustainability disclosure.
This research offers a unique contribution to the field of environmental responsibility within BGs by exploring the relatively underexplored roles of subsidiary autonomy and parent companies’ financial position in shaping the impact of vertical interlocking directors on subsidiary ER. It enriches the study of the non-economic value of vertical interlocking directors and provides a theoretical basis for environmental management practices in BGs.
