IDEAS home Printed from https://ideas.repec.org/a/eco/journ2/2018-01-2.html
   My bibliography  Save this article

The Trade-off Strategy between Financial and Environmental Performance: Assessment of Sustainable Value Added

Author

Listed:
  • Munawaroh Munawaroh

    (Krisnadwipayana University, Jl. Jatiwaringin Raya, Pondok Gede, Jakarta 13620, Indonesia,)

  • Imam Ghozali

    (Faculty of Economics and Business, Diponegoro University, Jl. Prof. Soedharto S.H. Tembalang Semarang, Indonesia,)

  • Fuad Fuad

    (Faculty of Economics and Business, Diponegoro University, Jl. Prof. Soedharto S.H. Tembalang Semarang, Indonesia,)

  • Faisal Faisal

    (Faculty of Economics and Business, Diponegoro University, Jl. Prof. Soedharto S.H. Tembalang Semarang, Indonesia.)

Abstract

Corporate sustainability issue has considered the most important aspects as it reflects the corporate consideration to environmental, social, and economic dimension. However, using trade-off strategy to assess the relationship between financial performance and environmental performance has not been implemented. The aim of this study was to apply an integrated analysis of trade-off strategy to assess the relationship between financial performance and environmental performance. The method was used Autoregressive to analyze the relationship between Return on Asset (ROA) as financial performance and Eco-Efficiency (EE) as environmental performance. The samples were business sectors non-financial listed in Nikkei225 in the period of 2005 to 2014. The result showed that EE significantly relates to ROA as shown by Granger Causality Test, and their relationship appeared to three sectors of business: Consumer Discretionary, Industrials, and Materials. Eco-Efficentcy significantly related to current financial performance , and the previous year financial performance. The impact of Eco-Efficeincy on the current financial performnace appeared only to sector of business Consumer Discretionary. The investigation applied opportunity cost to assess Sustainable Value Added and to describe the causality between financial performance and environmental performance as well as the trade-off strategy. It is expected that this finding might be considered an environmental management accounting tool to weigh the environmental impacts at different points to life cycle of company.

Suggested Citation

  • Munawaroh Munawaroh & Imam Ghozali & Fuad Fuad & Faisal Faisal, 2018. "The Trade-off Strategy between Financial and Environmental Performance: Assessment of Sustainable Value Added," International Journal of Energy Economics and Policy, Econjournals, vol. 8(1), pages 5-11.
    • Handle: RePEc:eco:journ2:2018-01-2
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijeep/article/download/5913/3479
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijeep/article/view/5913/3479
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Al-Tuwaijri, Sulaiman A. & Christensen, Theodore E. & Hughes, K. II, 2004. "The relations among environmental disclosure, environmental performance, and economic performance: a simultaneous equations approach," Accounting, Organizations and Society, Elsevier, vol. 29(5-6), pages 447-471.
    Full references (including those not matched with items on IDEAS)

    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. Nurlan Orazalin & Mady Baydauletov, 2020. "Corporate social responsibility strategy and corporate environmental and social performance: The moderating role of board gender diversity," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(4), pages 1664-1676, July.
    2. Omaima A.G. Hassan & Peter Romilly, 2018. "Relations between corporate economic performance, environmental disclosure and greenhouse gas emissions: New insights," Business Strategy and the Environment, Wiley Blackwell, vol. 27(7), pages 893-909, November.
    3. Li, Qiang & Wang, Shengying & He, Zichun & Li, Hanqiao & Xiang, Erwei, 2023. "Does stock market index adjustment affect environmental information disclosure? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 87(C).
    4. Altunbaş, Yener & Khan, Atiqur & Thornton, John, 2023. "Do M&As impact firm carbon intensity?11The views expressed in this paper are those of the authors and should not be attributed to the institutions with which they are affiliated.," Energy Economics, Elsevier, vol. 128(C).
    5. Chang, Yingying & Du, Xingqiang & Zeng, Quan, 2021. "Does environmental information disclosure mitigate corporate risk? Evidence from China," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(1).
    6. Lu Zhang & Yuan George Shan & Millicent Chang, 2021. "Can CSR Disclosure Protect Firm Reputation During Financial Restatements?," Journal of Business Ethics, Springer, vol. 173(1), pages 157-184, September.
    7. Mădălina Dumitru & Justyna Dyduch & Raluca-Gina Gușe & Joanna Krasodomska, 2017. "Corporate Reporting Practices in Poland and Romania – An Ex-ante Study to the New Non-financial Reporting European Directive," Accounting in Europe, Taylor & Francis Journals, vol. 14(3), pages 279-304, September.
    8. Rayenda Khresna Brahmana & Maria Kontesa, 2021. "Does clean technology weaken the environmental impact on the financial performance? Insight from global oil and gas companies," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 3411-3423, November.
    9. Riccardo Torelli & Federica Balluchi & Katia Furlotti, 2020. "The materiality assessment and stakeholder engagement: A content analysis of sustainability reports," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 470-484, March.
    10. Alena Kocmanová & Marie Pavláková Dočekalová & Tomáš Meluzín & Stanislav Škapa, 2020. "Sustainable Investing Model for Decision Makers (Based On Research of Manufacturing Industry in the Czech Republic)," Sustainability, MDPI, vol. 12(20), pages 1-27, October.
    11. Isabel Gallego-Alvarez & Mª Purificación Vicente-Galindo & Mª Purificación Galindo-Villardón & Miguel Rodríguez-Rosa, 2014. "Environmental Performance in Countries Worldwide: Determinant Factors and Multivariate Analysis," Sustainability, MDPI, vol. 6(11), pages 1-26, November.
    12. Wong, Jin Boon & Zhang, Qin, 2022. "Stock market reactions to adverse ESG disclosure via media channels," The British Accounting Review, Elsevier, vol. 54(1).
    13. Amal Aouadi & Sylvain Marsat, 2018. "Do ESG Controversies Matter for Firm Value? Evidence from International Data," Journal of Business Ethics, Springer, vol. 151(4), pages 1027-1047, September.
    14. Helfaya, Akrum & Aboud, Ahmed & Amin, Essam, 2023. "An examination of corporate environmental goals disclosure, sustainability performance and firm value – An Egyptian evidence," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 52(C).
    15. Eng, Li Li & Fikru, Mahelet G. & Vichitsarawong, Thanyaluk, 2021. "The impact of toxic chemical releases and their management on financial performance," Advances in accounting, Elsevier, vol. 53(C).
    16. Elijido-Ten, Evangeline, 2011. "Media coverage and voluntary environmental disclosures: A developing country exploratory experiment," Accounting forum, Elsevier, vol. 35(3), pages 139-157.
    17. Driss Rahma & Jarboui Anis, 2015. "Contribution of Social Disclosure and Organizational Culture to Create Financial Value of Tunisian Companies," Growth, Asian Online Journal Publishing Group, vol. 2(1), pages 10-17.
    18. Charles H. Cho & Jonathan Maurice & Emmanuelle Nègre & Marie-Anne Verdier, 2016. "Is environmental disclosure good for the environment? A meta-analysis and research agenda," Post-Print halshs-01369422, HAL.
    19. Hidemichi Fujii & Kazuyuki Iwata & Shinji Kaneko & Shunsuke Managi, 2013. "Corporate Environmental and Economic Performance of Japanese Manufacturing Firms: Empirical Study for Sustainable Development," Business Strategy and the Environment, Wiley Blackwell, vol. 22(3), pages 187-201, March.
    20. Qian, Wei & Schaltegger, Stefan, 2017. "Revisiting carbon disclosure and performance: Legitimacy and management views," The British Accounting Review, Elsevier, vol. 49(4), pages 365-379.

    More about this item

    Keywords

    Trade off Strategy; Financial Performance; Environmental Performance; Sustainable Value Added; Opportunity Cost; Eco-efficiency; Autoregressive;
    All these keywords.

    JEL classification:

    • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • N55 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Asia including Middle East

    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:eco:journ2:2018-01-2. 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: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    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.