Foreign residency rights, extradition agreement and environmental decoupling: The moderating role of political connections and independent directors

Abstract

This study investigates the impact of controlling shareholders with foreign residency rights (FRRs) on corporate environmental decoupling (ED) among Chinese A-share listed firms. The findings indicate that firms controlled by owners possessing FRRs are more likely to engage in ED, reflecting a strategic orientation toward symbolic environmental compliance while shirking substantive ecological accountability. However, this effect is attenuated for firms whose controlling owners are subject to extradition agreements between China and their host countries. Mechanism analyses reveal that these firms exhibit lower levels of sustainability reporting and reduced green innovation, both of which contribute to higher ED. Furthermore, moderating analyses show that the positive relationship between FRRs and ED is weaker in firms with political connections and in those with a higher proportion of independent directors on the board. The results remain robust after accounting for alternative variable specifications and potential endogeneity concerns.