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Environmental Management System and Financial Performance

Author

Listed:
  • Tze San Ong

    (Department of Accounting and Finance, Faculty of Economics and Management, Universiti Putra Malaysia)

  • Boon Heng Teh

    (Faculty of Management, Multimedia University)

  • Sin Huei Ng

    (INTI International University)

  • Wei Ni Soh

    (Department of Accounting and Finance, Faculty of Economics and Management, Universiti Putra Malaysia)

Abstract

The paper aims to explore the relationship between ISO 14001 certification and a company’s financial performance to investigate whether the certification to ISO 14001 environmental management standard has benefited the company’s financial performance or not. Using Malaysia as the research context, the results of a linear regression analysis show that firms with above-average performance have a greater tendency to pursue ISO 14001 certification. The findings also indicate that there is a significant relationship between ISO14001 certification and a company’s financial performance in an emerging economy context. The reason is the adoption of ISO 14001 standard does offers many benefits to companies, such as greater reputation and brand awareness on one hand, and higher sales and investors’ confidence on the other. The ISO 14001 certification helps to develop a better system which leads to costs reduction and revenue increase in the long run.

Suggested Citation

  • Tze San Ong & Boon Heng Teh & Sin Huei Ng & Wei Ni Soh, 2016. "Environmental Management System and Financial Performance," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 8(2), pages 27-53, April.
    • Handle: RePEc:umk:journl:v:8:y:2016:i:2:p:27-53
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    File URL: http://ijie.um.edu.my/filebank/published_article/10066/Environmental%20Management%20System%20and%20Financial%20Performance.pdf
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    Citations

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    Cited by:

    1. Quang Linh Huynh & Tran Thi Ngoc Lan, 2021. "Importance of Environmentally Managerial Accounting to Environmental and Economic Performance," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 381-388.
    2. Teddy Hikmat Fauzi, 2022. "The Effect of Environmental Performance on Firm Value with Mediating Role of Financial Performance in Manufacturing Companies in Indonesia," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 11, May.

    More about this item

    Keywords

    Environmental management system; ISO 14001; Malaysia; return on assets; return on equity;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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