LAUSR

Abstract Corporate environmental responsibility (CER) plays an important role in the sustainable policy of firms and affects the behaviors of managers. For U.S. listed firms for 1993-2018, our paper establishes an empirical model to detect CER's effect on managerial learning, which is reflected in investment-price sensitivity. We find that after controlling for endogeneity, CER concerns enhance investment-price sensitivity, while CER strength does not affect investment-price sensitivity. Further, we find that the effect of CER concerns is more pronounced for firms with more market competition, greater bankruptcy risk, and more product market uncertainty. Taken together, our evidence suggests that CER concerns could enhance the extent of managerial learning, especially for firms experiencing greater risks. Our paper provides new evidence for the role of CER in reducing corporate risk.