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The effect of the ISO-14001 environmental management system on corporate financial performance

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  • Jiangning Zhao

Abstract

This study employed a quasi-experimental design to compare ISO companies with the matched comparison companies on the effect of ISO-14001 registration (independent variable) on financial performance (three dependent variables): Return On Revenue (ROR), Return On Assets (ROA), and Operating Revenue (OPR). Eighty one pairs of companies (N = 162) were collected from the Standard & Poor's (S&P) database, which had at least one ISO certificate and for whom five years of financial data were available. Data on ISO registration indicated a strong pattern of distribution by industry, by years, and by the size of company. Control for initial difference, the results of statistical analyses (ANCOVA, MANOVA, and ANOVA)indicated that registration of ISO-14001 led to lower ROR and ROA in the two-year period, and no change in the third year period. OPR did not change. Early adoption, length of ISO registration and the size of company did not affect the relationship of ISO registration and financial performance.

Suggested Citation

  • Jiangning Zhao, 2008. "The effect of the ISO-14001 environmental management system on corporate financial performance," International Journal of Business Excellence, Inderscience Enterprises Ltd, vol. 1(1/2), pages 210-230.
    • Handle: RePEc:ids:ijbexc:v:1:y:2008:i:1/2:p:210-230
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    Citations

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    Cited by:

    1. Hammad Riaz & Abubakr Saeed, 2020. "Impact of environmental policy on firm's market performance: The case of ISO 14001," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 681-693, March.
    2. Pepis, Scott & de Jong, Pieter, 2019. "Effects of Shariah-compliant business practices on long-term financial performance," Pacific-Basin Finance Journal, Elsevier, vol. 53(C), pages 254-267.
    3. Hammad Riaz & Abubakr Saeed & Muhammad Saad Baloch & Nasrullah & Zeeshan Ahmad Khan, 2019. "Valuation of Environmental Management Standard ISO 14001: Evidence from an Emerging Market," JRFM, MDPI, vol. 12(1), pages 1-14, January.

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