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Does environmental performance affect financial performance? A meta-analysis

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  • Horváthová, Eva

Abstract

What do we know about the impact of environmental regulations/performance on firm performance? After more than three decades of theoretical as well as empirical research, the results seem to remain inconclusive. Some papers suggest that regulations harm firms, while others claim that regulations may contribute positively and give an impetus to innovations. Therefore, I examine the heterogeneity in financial-environmental performance nexus, empirically carrying out a meta-regression analysis of 64 outcomes from 37 empirical studies to uncover the underlying factors, which can influence the observed variation in the empirical results. The results suggest both that the empirical method used matters for the nexus and that the likelihood of finding a negative link between environmental and financial performance significantly increases when using simple correlation coefficients instead of more advanced econometric analysis. The results also indicate that the portfolio studies tend to report a negative link between environmental and financial performance. This likely reflects the omitted factors in portfolio studies. The positive link is found more frequently in common law countries than in civil law countries. The results also point to the importance of appropriate time coverage to establish a positive link between environmental and financial performance.

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Bibliographic Info

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 70 (2010)
Issue (Month): 1 (November)
Pages: 52-59

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Handle: RePEc:eee:ecolec:v:70:y:2010:i:1:p:52-59

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Web page: http://www.elsevier.com/locate/ecolecon

Related research

Keywords: Meta-analysis Environmental performance Financial performance;

References

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Citations

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Cited by:
  1. Havranek, Tomas & Irsova, Zuzana & Janda, Karel, 2011. "Demand for gasoline is more price-inelastic than commonly thought," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0m94j50t, Department of Agricultural & Resource Economics, UC Berkeley.
  2. Asongu, Simplice A, 2013. "Finance and growth: New evidence from Meta-analysis," MPRA Paper 52210, University Library of Munich, Germany.
  3. Lioui, Abraham & Sharma, Zenu, 2012. "Environmental corporate social responsibility and financial performance: Disentangling direct and indirect effects," Ecological Economics, Elsevier, vol. 78(C), pages 100-111.
  4. Francesco Perrini & Angeloantonio Russo & Antonio Tencati & Clodia Vurro, 2011. "Deconstructing the Relationship Between Corporate Social and Financial Performance," Journal of Business Ethics, Springer, vol. 102(1), pages 59-76, March.
  5. Branger, Frédéric & Quirion, Philippe, 2014. "Would border carbon adjustments prevent carbon leakage and heavy industry competitiveness losses? Insights from a meta-analysis of recent economic studies," Ecological Economics, Elsevier, vol. 99(C), pages 29-39.
  6. Patricia Crifo & Vanina Forget, 2012. "The Economics of Corporate Social Responsibility: A Survey," Working Papers hal-00720640, HAL.
  7. Asongu Simplice, 2013. "Finance and growth: Schumpeter might be wrong in our era. New evidence from Meta-analysis," Working Papers 13/009, African Governance and Development Institute..
  8. Marcelo Cajias & Franz Fuerst & Pat McAllister & Anupam Nanda, 2011. "Is ESG Commitment Linked to Investment Performance in the Real Estate Sector?," Real Estate & Planning Working Papers rep-wp2011-03, Henley Business School, Reading University.
  9. Horváthová, Eva, 2012. "The impact of environmental performance on firm performance: Short-term costs and long-term benefits?," Ecological Economics, Elsevier, vol. 84(C), pages 91-97.
  10. Nandy, Monomita & Lodh, Suman, 2012. "Do banks value the eco-friendliness of firms in their corporate lending decision? Some empirical evidence," International Review of Financial Analysis, Elsevier, vol. 25(C), pages 83-93.
  11. Patricia Crifo & Vanina Forget, 2013. "La responsabilité sociale et environnementale des entreprises : mirage ou virage ?," Working Papers hal-00830642, HAL.
  12. Sebastian Rathner, 2013. "The Influence of Primary Study Characteristics on the Performance Differential Between Socially Responsible and Conventional Investment Funds: A Meta-Analysis," Journal of Business Ethics, Springer, vol. 118(2), pages 349-363, December.

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