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The impact of environmental performance on firm performance: Short-term costs and long-term benefits?

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  • Horváthová, Eva

Abstract

We examine the intertemporal effect of environmental performance on financial performance and propose a method to assess the environmental performance in a fuller manner based on the weighting various pollutants according to their dangerousness to environment. Using our improved measures of environmental performance applied to the firm level data from the Czech Republic, the results suggest that while the effect of environmental performance on financial performance is negative for environmental performance lagged by 1year lag, it becomes positive for 2years lag. As a consequence, our findings indicate that Porter hypothesis holds in the long-run.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:ecolec:v:84:y:2012:i:c:p:91-97
    DOI: 10.1016/j.ecolecon.2012.10.001
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    More about this item

    Keywords

    Environmental performance; Financial performance; Environmental certification; Porter hypothesis;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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