Xiao Liu
ABSTRACT
This paper takes the lead in examining the non-linear links between corporate environmental investment and corporate financial performance across China. Ordinary least square (OLS) regression models are approximated using the data of Chinese A-share listed firms from 2009 to 2020. Robust test and two-stage least square (2SLS) methods are incorporated to cater for robustness and endogeneity. The research results show that corporate environmental investment has inverted U-shape impact on corporate financial performance. Furthermore, both firm risk and government subsidies moderate the inverted U-shape relationship between corporate environmental performance and corporate financial performance. These findings offer significant practical implications for businesses and Chinese government funding agencies by emphasizing the firm reputation and agency cost theories in the literature on the efficiency of corporate environmental investment.
- Clarke L, Weyant J, Birky A.2006. On the sources of technological change: assessing the evidence. Energy Economics. 28 (5-6), 579–595.Google Scholar
Cross Ref
- Wang C Y, Lin Y J. 2022.Does bargaining power mitigate the relationship between environmental regulation and firm performance? Evidence from China, Journal of Cleaner Production, 331,129859.Google ScholarCross Ref
- Anderson-Weir C H.2010. How does the Stock market react to corporate environmental news? Undergraduate Economic Review, 6(1), 1–29.Google Scholar
- Schaltenbrand B, Foerstl K, Azadegan A, Lindeman K. 2018. See what we want to see? The effects of managerial experience on corporate green investments. Journal of Business Ethics,150, 1129–1150.Google ScholarCross Ref
- Tang M F, Walsh G, Lerner D, Fitza M A, Li Q H. 2018. Green innovation, managerial concern and firm performance: an empirical study. Business Strategy and the Environment, 27(1), 39–51.Google ScholarCross Ref
- Hassel L G, Nilsson H, Nyquist S, 2005. The value relevance of environmental performance. European Accounting Review ,14(1), 41–61.Google ScholarCross Ref
- Friedman M A. 1970. Friedman doctrine: the social responsibility of business is to increase its profit. The New York Times Magazine. 32-33(33), 173-178.Google Scholar
- Rassier D, Earnhart D. 2010. Does the Porter hypothesis explain expected future financial performance? The effect of clean water regulation on chemical manufacturing firms. Environmental and Resource Economics, 45, 353–377.Google ScholarCross Ref
- Jensen M C, Meckling W H.1976. Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics 3(4), 305–360.Google ScholarCross Ref
- Barnea A, Rubin A. 2010. Corporate social responsibility as a conflict between shareholders. Journal of Business Ethics, 97(1) : 71-86.Google ScholarCross Ref
- Carroll A B. 1979. A three-dimensional conceptual model of corporate social performance. Academy of Management Review, 4(4), 497–505.Google ScholarCross Ref
- Lai C S, Chiu C J, Yang C F, Pai D C. 2010. The effects of corporate social responsibility on brand performance: The mediating effect of industrial brand equity and corporate reputation. Journal of Business Ethics, 95(3), 457–469.Google ScholarCross Ref
- Rindova V P, Williamson, I.O.; Petkova, A.P.; Sever, J.M. 2005.Being good or being known: An empirical examination of the dimensions, antecedents, and consequences of organizational reputation. Academy of Management Review, 48(6), 1033–1049.Google Scholar
- Tang Z, Hull C, Rothenberg S. 2012.How corporate social responsibility engagement strategy moderates the CSR–financial performance relationship. Journal of Management Studies, 49, 1274–1303.Google ScholarCross Ref
- Hart S. 1997. Beyond greening: strategies for a suitable world. Harvard Business Review,75, 66–67.Google Scholar
- Orlitzky M, Schmidt F, Rynes S. 2003. Corporate social and financial performance: a meta-analysis. Organization Studies,24, 403–441.Google ScholarCross Ref
- Dixon-Fowler H, Slater D, Johnson J, Ellstrand A, Romi A. 2013. Beyond “does it pay to be green?” A meta-analysis of moderators of the CEP–CFP relationship. Journal of Business Ethics,112, 353–366.Google ScholarCross Ref
- Porter M E, Van-der-Linde C. 1995. Toward a new conception of the environment-competitiveness relationship. Journal of Economic Perspectives, 9(4), 97–118.Google ScholarCross Ref
- Guenster N, Derwall J, Bauer R, Koedijk C. 2011. The economic value of corporate eco-efficiency. European Financial Management, 17(4), 679–704.Google ScholarCross Ref
- Chariri A, Bukit G, Eklesia O, Christi B, Tarigan D. 2018.Does green investment increase financial performance? Empirical evidence from Indonesian companies. E3S Web of Conferences. 31, 1–7.Google Scholar
- Chen Y, Ma Y. 2021. Does green investment improve energy firm performance? Energy Policy, 153, 112252.Google ScholarCross Ref
- Griffin J J, Mahon J F. 1997.The corporate social performance and corporate financial performance debate: twenty‐five years of excellent research. Business and Society, 36(1), 5–31.Google ScholarCross Ref
- Dopierała Ł, Mosionek-Schweda M, Laskowicz T, Ilczuk D.2022. Financial performance of renewable energy producers: A panel data analysis from the Baltic Sea Region, Energy Reports, 8,11492-11503.Google ScholarCross Ref
- Scholes M, Williams J. 1977. Estimating betas from nonsynchronous data. Journal of Financial Economics, 5(3), 309–327.Google ScholarCross Ref
- Liu M, Lu W. 2019. Corporate social responsibility, firm performance and firm risk: the role of firm reputation. Asia-Pacific Journal of Accounting & Economics, 1–21.Google Scholar
- Francoeur C, Melis A, Gaia S. 2017. Green or greed? An alternative look at CEO compensation and corporate environmental commitment. Journal of Business Ethics, 140, 439–453.Google ScholarCross Ref
- Haans R F J, Pieters C, He Z L. 2016.Thinking about U: Theorizing and testing U- and inverted U-shaped relationships in strategy research. Strategic Management Journal, 7, 1177–1195.Google ScholarCross Ref
Index Terms
- Corporate Environmental Investment and Corporate Performance: the Moderating Role of Firm Risk and Government Subsidies
Recommendations
Investor Sentiment, Corporate Investment, and Firm Performance
ICIII '10: Proceedings of the 2010 3rd International Conference on Information Management, Innovation Management and Industrial Engineering - Volume 01This paper focuses on the effects of investor sentiment on corporate investment and firm performance, using the panel data of Chinese listed companies from 2005 to 2008. The results reveal that investor sentiment has a statistically robust impact on ...
Investor Overconfidence, Firm Valuation, and Corporate Decisions
Behavioral theory predicts that investor overconfidence leads to overpricing because overconfident investors overestimate the quality of their information and underestimate risk. We test this prediction by using a measure of investor overconfidence ...
Corporate Postretirement Benefit Plans and Real Investment
This paper shows that the real investment by nonfinancial firms is systematically related to the size of their defined-benefit plan. In particular, these plans allow research and development R&D-intensive firms to retain and borrow from their employees, ...
Comments