Green Decisions in a Red Zone: Does Firm‐Level Political Risk Influence Waste Management? The Moderating Effect of Board Attributes

ABSTRACT Drawing on real options theory, stakeholder theory, and agency theory, this study investigates the association between firm‐level political risk and corporate waste management practices. Using a panel of 2198 firm‐year observations drawn from S&P 500 companies over the period 2010–2023, we find that elevated firm‐level political risk is significantly and negatively associated with firms' recycling performance, consistent with the prediction that regulatory uncertainty raises the value of deferring irreversible environmental investments. This baseline relationship is robust to a comprehensive battery of identification checks, including instrumental‐variables estimation, entropy‐balanced regressions, Heckman two‐stage selection correction, Driscoll–Kraay and two‐way clustered standard errors, lagged and lead political‐risk specifications, fractional logit models, and industry–year fixed‐effects structures. Beyond the main association, we examine whether board governance moderates this relationship. Our results indicate that board size and board gender diversity each significantly moderate the negative association between political risk and waste management, whereas board independence does not exert a statistically significant moderating influence. These findings suggest that board size and board gender diversity play an important moderating role in the association between political risk and waste management, highlighting the relevance of board characteristics in relation to firms' environmental responses under political uncertainty. Collectively, this study advances the literature by offering the first empirical evidence linking firm‐level political risk to waste management and by identifying board attributes as important governance mechanisms that moderate the association between political risk and firms' waste management practices.