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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

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Keywords: Meta-analysis Environmental performance Financial performance;

References

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Citations

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Cited by:
  1. Frédéric Branger & Philippe Quirion, 2013. "Would Border Carbon Adjustments prevent carbon leakage and heavy industry competitiveness losses? Insights from a meta-analysis of recent economic studies," CIRED Working Papers halshs-00870689, HAL.
  2. Tomáš Havránek & Zuzana Iršová & Karel Janda, 2011. "Demand for Gasoline Is More Price-Inelastic than Commonly Thought," Working Papers IES, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies 2011/10, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Mar 2011.
  3. Asongu, Simplice A, 2013. "Finance and growth: New evidence from Meta-analysis," MPRA Paper 52210, University Library of Munich, Germany.
  4. Patricia Crifo & Vanina Forget, 2013. "La responsabilité sociale et environnementale des entreprises : mirage ou virage ?," Working Papers hal-00830642, HAL.
  5. Cajias, Marcelo & Fuerst, Franz & McAllister, Pat & Nanda, Anupam, 2011. "Is ESG Commitment Linked to Investment Performance in the Real Estate Sector?," ERES, European Real Estate Society (ERES) eres2011_118, European Real Estate Society (ERES).
  6. Horváthová, Eva, 2012. "The impact of environmental performance on firm performance: Short-term costs and long-term benefits?," Ecological Economics, Elsevier, Elsevier, vol. 84(C), pages 91-97.
  7. Francesco Perrini & Angeloantonio Russo & Antonio Tencati & Clodia Vurro, 2011. "Deconstructing the Relationship Between Corporate Social and Financial Performance," Journal of Business Ethics, Springer, Springer, vol. 102(1), pages 59-76, March.
  8. Patricia Crifo & Vanina Forget, 2012. "The Economics of Corporate Social Responsibility: A Survey," Working Papers hal-00720640, HAL.
  9. Simplice A, Asongu, 2011. "Finance and growth: Schumpeter might be wrong in our era. New evidence from Meta-analysis," MPRA Paper 32559, University Library of Munich, Germany, revised 07 Feb 2013.
  10. Lioui, Abraham & Sharma, Zenu, 2012. "Environmental corporate social responsibility and financial performance: Disentangling direct and indirect effects," Ecological Economics, Elsevier, Elsevier, vol. 78(C), pages 100-111.
  11. 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, Springer, vol. 118(2), pages 349-363, December.
  12. 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, Elsevier, vol. 25(C), pages 83-93.

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