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Environmental and Financial Performance. Is there a win-win or a win-loss situation? Evidence from the Greek manufacturing

Author

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  • Kounetas, Kostas
  • Alexopoulos, Elias
  • Tzelepis, Dimitris

Abstract

This study examines the causal linkage between environmental and financial performance in Greek manufacturing firms. Environmental performance is measured according to accounting data following the Eco Management and Auditing Scheme guidelines and ISO certification. Return on assets and return on sales are used as indicators of financial performance. Empirical findings suggest that there seems to be a link between these dimensions irrespectively of the particular sector of activity. Contrary to similar studies a “virtuous circle” does not exist as the avoidance of environmental improving investments is related to a better financial performance. On the other hand firms with superior financial performance seem to achieve a better environmental performance. At the same time firm specific and market characteristics significantly affect this relationship. These findings provide evidence that governmental and corporate actions are necessary in order to lead to a more sustainable corporate performance in the long run

Suggested Citation

  • Kounetas, Kostas & Alexopoulos, Elias & Tzelepis, Dimitris, 2016. "Environmental and Financial Performance. Is there a win-win or a win-loss situation? Evidence from the Greek manufacturing," MPRA Paper 80906, University Library of Munich, Germany, revised 19 Jul 2017.
  • Handle: RePEc:pra:mprapa:80906
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    5. Francesco Gangi & Lucia Michela Daniele & Nicola Varrone, 2020. "How do corporate environmental policy and corporate reputation affect risk‐adjusted financial performance?," Business Strategy and the Environment, Wiley Blackwell, vol. 29(5), pages 1975-1991, July.
    6. Othman Hel Al-Dhaimesh, 2020. "Green Accounting Practices and Economic Value Added: An Applied Study on Companies Listed on the Qatar Stock Exchange," International Journal of Energy Economics and Policy, Econjournals, vol. 10(6), pages 164-168.
    7. Diego A. Vazquez-Brust & José Antonio Plaza-Úbeda, 2021. "What Characteristics Do the Firms Have That Go Beyond Compliance with Regulation in Environmental Protection? A Multiple Discriminant Analysis," Sustainability, MDPI, Open Access Journal, vol. 13(4), pages 1-27, February.
    8. Thi‐Hong‐Van Hoang & Wojciech Przychodzen & Justyna Przychodzen & Elysé A. Segbotangni, 2020. "Does it pay to be green? A disaggregated analysis of U.S. firms with green patents," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1331-1361, March.
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    More about this item

    Keywords

    environmental performance; financial performance; causality; GMM; Greece.;
    All these keywords.

    JEL classification:

    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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