IDEAS home Printed from https://ideas.repec.org/a/bla/bstrat/v28y2019i5p858-871.html
   My bibliography  Save this article

A quantitative study of financing efficiency of low‐carbon companies: A three‐stage data envelopment analysis

Author

Listed:
  • Xun Liu
  • Xiaoliang Yu
  • Simon Gao

Abstract

This study set out to evaluate the financing efficiency of low‐carbon companies. Applying a three‐stage data envelopment analysis with the data from 85 listed companies in China's low‐carbon industries over the period 2011 to 2017, this study has found that the overall financing efficiency of low‐carbon companies was relatively high, and the pure technical efficiency was quite steady over the period. The overall financing efficiency of these low‐carbon companies on average tended to change with the scale efficiency. This study has also shown that the scale efficiency was the main constraint influencing the financing efficiency of low‐carbon companies in China over the period. Our results are robust and have significant implications for policy makers and corporate managers.

Suggested Citation

  • Xun Liu & Xiaoliang Yu & Simon Gao, 2019. "A quantitative study of financing efficiency of low‐carbon companies: A three‐stage data envelopment analysis," Business Strategy and the Environment, Wiley Blackwell, vol. 28(5), pages 858-871, July.
  • Handle: RePEc:bla:bstrat:v:28:y:2019:i:5:p:858-871
    DOI: 10.1002/bse.2288
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/bse.2288
    Download Restriction: no

    File URL: https://libkey.io/10.1002/bse.2288?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jenkins, Jesse D., 2014. "Political economy constraints on carbon pricing policies: What are the implications for economic efficiency, environmental efficacy, and climate policy design?," Energy Policy, Elsevier, vol. 69(C), pages 467-477.
    2. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    3. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    4. Mazzucato, Mariana & Semieniuk, Gregor, 2018. "Financing renewable energy: Who is financing what and why it matters," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 8-22.
    5. Ronan Bolton & Timothy J Foxon & Stephen Hall, 2016. "Energy transitions and uncertainty: Creating low carbon investment opportunities in the UK electricity sector," Environment and Planning C, , vol. 34(8), pages 1387-1403, December.
    6. Campiglio, Emanuele, 2016. "Beyond carbon pricing: The role of banking and monetary policy in financing the transition to a low-carbon economy," Ecological Economics, Elsevier, vol. 121(C), pages 220-230.
    7. Sihai Li & Xianzhong Song & Huiying Wu, 2015. "Political Connection, Ownership Structure, and Corporate Philanthropy in China: A Strategic-Political Perspective," Journal of Business Ethics, Springer, vol. 129(2), pages 399-411, June.
    8. Beladi, Hamid & Chao, Chi Chur & Hu, May, 2018. "Does tax avoidance behavior affect bank loan contracts for Chinese listed firms?," International Review of Financial Analysis, Elsevier, vol. 58(C), pages 104-116.
    9. Shihong Zeng & Mimi Hu & Bin Su, 2016. "Research on Investment Efficiency and Policy Recommendations for the Culture Industry of China Based on a Three-Stage DEA," Sustainability, MDPI, vol. 8(4), pages 1-15, March.
    10. Alex Bowen & Emanuele Campiglio & Massimo Tavoni, 2014. "A Macroeconomic Perspective On Climate Change Mitigation: Meeting The Financing Challenge," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 5(01), pages 1-35.
    11. Busch, Timo & Hoffmann, Volker H., 2007. "Emerging carbon constraints for corporate risk management," Ecological Economics, Elsevier, vol. 62(3-4), pages 518-528, May.
    12. Harold Fried & Shelton Schmidt & Suthathip Yaisawarng, 1999. "Incorporating the Operating Environment Into a Nonparametric Measure of Technical Efficiency," Journal of Productivity Analysis, Springer, vol. 12(3), pages 249-267, November.
    13. Jean D. Kabongo & Olivier Boiral, 2017. "Doing More with Less: Building Dynamic Capabilities for Eco‐Efficiency," Business Strategy and the Environment, Wiley Blackwell, vol. 26(7), pages 956-971, November.
    14. Andreas Dellnitz & Andreas Kleine & Wilhelm Rödder, 2018. "CCR or BCC: what if we are in the wrong model?," Journal of Business Economics, Springer, vol. 88(7), pages 831-850, September.
    15. Roel Brouwers & Frederiek Schoubben & Cynthia Van Hulle, 2018. "The influence of carbon cost pass through on the link between carbon emission and corporate financial performance in the context of the European Union Emission Trading Scheme," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1422-1436, December.
    16. Hu, May & Zhang, Jing & Chao, Chichur, 2019. "Regional financial efficiency and its non-linear effects on economic growth in China," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 193-206.
    17. Rui Jiang & Yulin Zhou & Rongrong Li, 2018. "Moving to a Low-Carbon Economy in China: Decoupling and Decomposition Analysis of Emission and Economy from a Sector Perspective," Sustainability, MDPI, vol. 10(4), pages 1-12, March.
    18. H. Fried & C. Lovell & S. Schmidt & S. Yaisawarng, 2002. "Accounting for Environmental Effects and Statistical Noise in Data Envelopment Analysis," Journal of Productivity Analysis, Springer, vol. 17(1), pages 157-174, January.
    19. George E. Halkos & Michael L. Polemis, 2019. "The impact of market structure on environmental efficiency in the United States: A quantile approach," Business Strategy and the Environment, Wiley Blackwell, vol. 28(1), pages 127-142, January.
    20. Alex Bowen & Sam Fankhauser, 2011. "Low-Carbon Development for the Least Developed Countries," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 12(1), pages 145-162, January.
    21. Zeng, Shihong & Jiang, Chunxia & Ma, Chen & Su, Bin, 2018. "Investment efficiency of the new energy industry in China," Energy Economics, Elsevier, vol. 70(C), pages 536-544.
    22. Jun Xie & Wataru Nozawa & Michiyuki Yagi & Hidemichi Fujii & Shunsuke Managi, 2019. "Do environmental, social, and governance activities improve corporate financial performance?," Business Strategy and the Environment, Wiley Blackwell, vol. 28(2), pages 286-300, February.
    23. Juhyun Jung & Kathleen Herbohn & Peter Clarkson, 2018. "Carbon Risk, Carbon Risk Awareness and the Cost of Debt Financing," Journal of Business Ethics, Springer, vol. 150(4), pages 1151-1171, July.
    24. Lee, Myunghun & Zhang, Ning, 2012. "Technical efficiency, shadow price of carbon dioxide emissions, and substitutability for energy in the Chinese manufacturing industries," Energy Economics, Elsevier, vol. 34(5), pages 1492-1497.
    25. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    26. Aldo Baietti & Andrey Shlyakhtenko & Roberto La Rocca & Urvaksh D. Patel, 2012. "Green Infrastructure Finance : Leading Initiatives and Research," World Bank Publications - Books, The World Bank Group, number 13142.
    27. Robert Gross, Tim Foxon, 2003. "Policy support for innovation to secure improvements in resource productivity," International Journal of Environmental Technology and Management, Inderscience Enterprises Ltd, vol. 3(2), pages 118-130.
    28. Chin Hee Hahn & Sang-Hyop Lee & Kyoung-Soo Yoon (ed.), 2012. "Responding to Climate Change," Books, Edward Elgar Publishing, number 14709.
    29. Zhong, Wei & Yuan, Wei & Li, Susan X. & Huang, Zhimin, 2011. "The performance evaluation of regional R&D investments in China: An application of DEA based on the first official China economic census data," Omega, Elsevier, vol. 39(4), pages 447-455, August.
    30. G Capece & F Di Pillo & M Gastaldi & N Levialdi & M Miliacca, 2017. "Examining the effect of managing GHG emissions on business performance," Business Strategy and the Environment, Wiley Blackwell, vol. 26(8), pages 1041-1060, December.
    31. Wang, Qiang & Wu, Shi-dai & Zeng, Yue-e & Wu, Bo-wei, 2016. "Exploring the relationship between urbanization, energy consumption, and CO2 emissions in different provinces of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 1563-1579.
    32. Xiaohuan Lyu & Anna Shi, 2018. "Research on the Renewable Energy Industry Financing Efficiency Assessment and Mode Selection," Sustainability, MDPI, vol. 10(1), pages 1-13, January.
    33. Nicholas Apergis & Michael L. Polemis, 2016. "Competition and efficiency in the MENA banking region: a non-structural DEA approach," Applied Economics, Taylor & Francis Journals, vol. 48(54), pages 5276-5291, November.
    34. Su‐Yol Lee, 2012. "Corporate Carbon Strategies in Responding to Climate Change," Business Strategy and the Environment, Wiley Blackwell, vol. 21(1), pages 33-48, January.
    35. Du, Limin & Mao, Jie, 2015. "Estimating the environmental efficiency and marginal CO2 abatement cost of coal-fired power plants in China," Energy Policy, Elsevier, vol. 85(C), pages 347-356.
    36. Ederer, Nikolaus, 2015. "Evaluating capital and operating cost efficiency of offshore wind farms: A DEA approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 1034-1046.
    37. Shewmake, Sharon & Okrent, Abigail & Thabrew, Lanka & Vandenbergh, Michael, 2015. "Predicting consumer demand responses to carbon labels," Ecological Economics, Elsevier, vol. 119(C), pages 168-180.
    38. Fonseka, M.M. & Samarakoon, Lalith P. & Tian, Gao-Liang, 2012. "Equity financing capacity and stock returns: Evidence from China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(5), pages 1277-1291.
    39. Rajiv D. Banker & Victor V. Podinovski, 2017. "Novel theory and methodology developments in data envelopment analysis," Annals of Operations Research, Springer, vol. 250(1), pages 1-3, March.
    40. Jim Watson & Rob Byrne & David Ockwell & Michele Stua, 2015. "Lessons from China: building technological capabilities for low carbon technology transfer and development," Climatic Change, Springer, vol. 131(3), pages 387-399, August.
    41. Ricci, Elena Claire & Banterle, Alessandro & Stranieri, Stefanella, 2018. "Trust to Go Green: An Exploration of Consumer Intentions for Eco-friendly Convenience Food," Ecological Economics, Elsevier, vol. 148(C), pages 54-65.
    42. Matthias Damert & Rupert J. Baumgartner, 2018. "Intra‐Sectoral Differences in Climate Change Strategies: Evidence from the Global Automotive Industry," Business Strategy and the Environment, Wiley Blackwell, vol. 27(3), pages 265-281, March.
    43. Dietsch, Michel & Lozano-Vivas, Ana, 2000. "How the environment determines banking efficiency: A comparison between French and Spanish industries," Journal of Banking & Finance, Elsevier, vol. 24(6), pages 985-1004, June.
    44. Monika Winn & Manfred Kirchgeorg & Andrew Griffiths & Martina K. Linnenluecke & Elmar Günther, 2011. "Impacts from climate change on organizations: a conceptual foundation," Business Strategy and the Environment, Wiley Blackwell, vol. 20(3), pages 157-173, March.
    45. Altunbas, Yener & Liu, Ming-Hau & Molyneux, Philip & Seth, Rama, 2000. "Efficiency and risk in Japanese banking," Journal of Banking & Finance, Elsevier, vol. 24(10), pages 1605-1628, October.
    46. Warwick J. McKibbin & Peter J. Wilcoxen, 2002. "The Role of Economics in Climate Change Policy," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 107-129, Spring.
    47. Cummins, J. David & Weiss, Mary A. & Xie, Xiaoying & Zi, Hongmin, 2010. "Economies of scope in financial services: A DEA efficiency analysis of the US insurance industry," Journal of Banking & Finance, Elsevier, vol. 34(7), pages 1525-1539, July.
    48. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    49. Abagail McWilliams & Annaleena Parhankangas & Jason Coupet & Eric Welch & Darold T. Barnum, 2016. "Strategic Decision Making for the Triple Bottom Line," Business Strategy and the Environment, Wiley Blackwell, vol. 25(3), pages 193-204, March.
    50. Geddes, Anna & Schmidt, Tobias S. & Steffen, Bjarne, 2018. "The multiple roles of state investment banks in low-carbon energy finance: An analysis of Australia, the UK and Germany," Energy Policy, Elsevier, vol. 115(C), pages 158-170.
    51. de Jong, Abe & Verbeek, Marno & Verwijmeren, Patrick, 2011. "Firms' debt-equity decisions when the static tradeoff theory and the pecking order theory disagree," Journal of Banking & Finance, Elsevier, vol. 35(5), pages 1303-1314, May.
    52. Lin Nan & Xiaoyan Wen, 2014. "Financing and Investment Efficiency, Information Quality, and Accounting Biases," Management Science, INFORMS, vol. 60(9), pages 2308-2323, September.
    53. Zhu, Junming & Niu, Limin & Ruth, Matthias & Shi, Lei, 2018. "Technological Change and Energy Efficiency in Large Chinese Firms," Ecological Economics, Elsevier, vol. 150(C), pages 241-250.
    54. Hanson, Donald & Laitner, John A. Skip, 2004. "An integrated analysis of policies that increase investments in advanced energy-efficient/low-carbon technologies," Energy Economics, Elsevier, vol. 26(4), pages 739-755, July.
    55. Fries, Steven & Taci, Anita, 2005. "Cost efficiency of banks in transition: Evidence from 289 banks in 15 post-communist countries," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 55-81, January.
    56. Albert Czerny & Peter Letmathe, 2017. "Eco‐efficiency: GHG reduction related environmental and economic performance. The case of the companies participating in the EU Emissions Trading Scheme," Business Strategy and the Environment, Wiley Blackwell, vol. 26(6), pages 791-806, September.
    57. Stephen Hall & Timothy J Foxon & Ronan Bolton, 2017. "Investing in low-carbon transitions: energy finance as an adaptive market," Climate Policy, Taylor & Francis Journals, vol. 17(3), pages 280-298, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kumar, Anil & Luthra, Sunil & Mangla, Sachin Kumar & Garza-Reyes, Jose Arturo & Kazancoglu, Yigit, 2023. "Analysing the adoption barriers of low-carbon operations: A step forward for achieving net-zero emissions," Resources Policy, Elsevier, vol. 80(C).
    2. Xianhua Tan & Danting Zheng & Yuanyuan Zhu & Sanggyun Na, 2023. "The Financing Efficiency of China’s Industrial Listed Enterprises Based on the Dynamic–Network SBM Model," Sustainability, MDPI, vol. 15(6), pages 1-19, March.
    3. Amir Hossein Azadnia & Simon Stephens & Pezhman Ghadimi & George Onofrei, 2022. "A comprehensive performance measurement framework for business incubation centres: Empirical evidence in an Irish context," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2437-2455, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mai, Nhat Chi, 2015. "Efficiency of the banking system in Vietnam under financial liberalization," OSF Preprints qsf6d, Center for Open Science.
    2. Zeng, Shihong & Jiang, Chunxia & Ma, Chen & Su, Bin, 2018. "Investment efficiency of the new energy industry in China," Energy Economics, Elsevier, vol. 70(C), pages 536-544.
    3. Huang, Wei & Eling, Martin, 2013. "An efficiency comparison of the non-life insurance industry in the BRIC countries," European Journal of Operational Research, Elsevier, vol. 226(3), pages 577-591.
    4. Ghosh, Saibal, 2018. "Bad luck, Bad policy or Bad banking? Understanding the financial management behavior of MENA banks," Journal of Multinational Financial Management, Elsevier, vol. 47, pages 110-128.
    5. Mansour, Rana & El Moussawi, Chawki, 2020. "Efficiency, technical progress and productivity of Arab banks: A non-parametric approach," The Quarterly Review of Economics and Finance, Elsevier, vol. 75(C), pages 191-208.
    6. Avkiran, Necmi K., 2009. "Removing the impact of environment with units-invariant efficient frontier analysis: An illustrative case study with intertemporal panel data," Omega, Elsevier, vol. 37(3), pages 535-544, June.
    7. Franz R. Hahn, 2007. "Determinants of Bank Efficiency in Europe. Assessing Bank Performance Across Markets," WIFO Studies, WIFO, number 31499.
    8. Muliaman Hadad & Maximilian Hall & Karligash Kenjegalieva & Wimboh Santoso & Richard Simper, 2011. "Banking efficiency and stock market performance: an analysis of listed Indonesian banks," Review of Quantitative Finance and Accounting, Springer, vol. 37(1), pages 1-20, July.
    9. Sang-Lyul Ryu & Jayoun Won, 2022. "The Value Relevance of Operational Innovation: Insights from the Perspective of Firm Life Cycle," Sustainability, MDPI, vol. 14(4), pages 1-18, February.
    10. Schaper, Philipp, 2017. "Under pressure: how the business environment affects productivity and efficiency of European life insurance companiesAuthor-Name: Eling, Martin," European Journal of Operational Research, Elsevier, vol. 258(3), pages 1082-1094.
    11. Franz R. Hahn, 2005. "Determinants of Bank Profitability in Austria. A Micro-Macro Approach," WIFO Studies, WIFO, number 25688.
    12. Hall, Maximilian J.B. & Kenjegalieva, Karligash A. & Simper, Richard, 2012. "Environmental factors affecting Hong Kong banking: A post-Asian financial crisis efficiency analysis," Global Finance Journal, Elsevier, vol. 23(3), pages 184-201.
    13. Nadia Ameli & Paul Drummond & Alexander Bisaro & Michael Grubb & Hugues Chenet, 2020. "Climate finance and disclosure for institutional investors: why transparency is not enough," Climatic Change, Springer, vol. 160(4), pages 565-589, June.
    14. Mingli Song & Guangshe Jia & Puwei Zhang, 2020. "An Evaluation of Air Transport Sector Operational Efficiency in China based on a Three-Stage DEA Analysis," Sustainability, MDPI, vol. 12(10), pages 1-16, May.
    15. Chiu, Yung-Ho & Chen, Yu-Chuan, 2009. "The analysis of Taiwanese bank efficiency: Incorporating both external environment risk and internal risk," Economic Modelling, Elsevier, vol. 26(2), pages 456-463, March.
    16. Drake, Leigh & Hall, Maximilian J.B. & Simper, Richard, 2006. "The impact of macroeconomic and regulatory factors on bank efficiency: A non-parametric analysis of Hong Kong's banking system," Journal of Banking & Finance, Elsevier, vol. 30(5), pages 1443-1466, May.
    17. Abdel Latef Anouze & Imad Bou-Hamad, 2021. "Inefficiency source tracking: evidence from data envelopment analysis and random forests," Annals of Operations Research, Springer, vol. 306(1), pages 273-293, November.
    18. Jingqi Sun & Nuermaimaiti Ruze & Jianjun Zhang & Haoran Zhao & Boyang Shen, 2019. "Evaluating the Investment Efficiency of China’s Provincial Power Grid Enterprises under New Electricity Market Reform: Empirical Evidence Based on Three-Stage DEA Model," Energies, MDPI, vol. 12(18), pages 1-17, September.
    19. Angela Stefania Bergantino & Enrico Musso, 2011. "A Multi-step Approach to Model the Relative Efficiency of European Ports: The Role of Regulation and Other Non-discretionary Factors," Chapters, in: Kevin Cullinane (ed.), International Handbook of Maritime Economics, chapter 18, Edward Elgar Publishing.
    20. Pengyu Ren & Zhaoxia Liu, 2021. "Efficiency Evaluation of China’s Public Sports Services: A Three-Stage DEA Model," IJERPH, MDPI, vol. 18(20), pages 1-12, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:bstrat:v:28:y:2019:i:5:p:858-871. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-0836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.