IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i4p1399-d1335031.html
   My bibliography  Save this article

Sustainable Practices and Performance of Resource-Based Companies: The Role of Internal Control

Author

Listed:
  • Xiao Liu

    (School of Economics and Management, Beijing Forestry University, Beijing 100083, China)

  • Huanxue Pan

    (School of Economics and Management, Beijing Forestry University, Beijing 100083, China)

  • Weixing Lin

    (School of Economics and Management, Beijing Forestry University, Beijing 100083, China)

  • Mengkai Wang

    (School of Business, Renmin University of China, Beijing 100872, China)

  • Qiange Zhang

    (School of Economics and Management, Beijing University of Posts and Telecommunications, Beijing 100876, China)

Abstract

As the concept of sustainable resource usage gains popularity, resource-based companies are faced with the challenge of reconciling environmental responsibility with corporate performance to achieve the “coexistence” of environmental and economic benefits. We take data related to RBCs for 2010–2020 and perform a multiple regression analysis of the data. This study focuses on the role of internal control in analyzing the impact of resource-based companies (RBCs) on corporate financial performance (CFP) while assuming corporate environmental responsibility (CER). The findings reveal that the fulfillment of CER by RBCs positively impacts CFP. We then add a moderating test to observe the role of internal controls in the relationship between the two. The results show that the positive effect of CER on CFP is greater with stronger internal control measures. In addition, we introduce heterogeneity analysis to analyze the effect of firm ownership. The moderating effect is diminished in privately owned companies. This research provides empirical evidence for the moderating effect of internal control on the connection between CER and CFP while also considering the influence of ownership.

Suggested Citation

  • Xiao Liu & Huanxue Pan & Weixing Lin & Mengkai Wang & Qiange Zhang, 2024. "Sustainable Practices and Performance of Resource-Based Companies: The Role of Internal Control," Sustainability, MDPI, vol. 16(4), pages 1-14, February.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:4:p:1399-:d:1335031
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/4/1399/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/4/1399/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hoje Jo & Hakkon Kim & Kwangwoo Park, 2015. "Corporate Environmental Responsibility and Firm Performance in the Financial Services Sector," Journal of Business Ethics, Springer, vol. 131(2), pages 257-284, October.
    2. Asmund Rygh & Gabriel R. G. Benito, 2022. "Governmental goals and the international strategies of state-owned multinational enterprises: a conceptual discussion," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(4), pages 1155-1181, December.
    3. Christina W. Y. Wong & Xin Miao & Shuang Cui & Yanhong Tang, 2018. "Impact of Corporate Environmental Responsibility on Operating Income: Moderating Role of Regional Disparities in China," Journal of Business Ethics, Springer, vol. 149(2), pages 363-382, May.
    4. Dongmin Kong & Boyang Liu, 2023. "Digital Technology and Corporate Social Responsibility: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(9), pages 2967-2993, July.
    5. Xiao Li, 2020. "The effectiveness of internal control and innovation performance: An intermediary effect based on corporate social responsibility," PLOS ONE, Public Library of Science, vol. 15(6), pages 1-31, June.
    6. Amy J. Hillman & Albert A. Cannella & Ramona L. Paetzold, 2000. "The Resource Dependence Role of Corporate Directors: Strategic Adaptation of Board Composition in Response to Environmental Change," Journal of Management Studies, Wiley Blackwell, vol. 37(2), pages 235-256, March.
    7. Popli, Manish & Raithatha, Mehul & Ahsan, Faisal Mohammad, 2021. "Signaling behavioral intent through better governance: A study of emerging market multinational enterprises," Journal of Business Research, Elsevier, vol. 135(C), pages 697-710.
    8. Liu Yang & Han Qin & Quanxin Gan & Jiafu Su, 2020. "Internal Control Quality, Enterprise Environmental Protection Investment and Finance Performance: An Empirical Study of China’s A-Share Heavy Pollution Industry," IJERPH, MDPI, vol. 17(17), pages 1-15, August.
    9. Alkaraan, Fadi & Albitar, Khaldoon & Hussainey, Khaled & Venkatesh, VG, 2022. "Corporate transformation toward Industry 4.0 and financial performance: The influence of environmental, social, and governance (ESG)," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    10. Yuan, Baolong & Cao, Xueyun, 2022. "Do corporate social responsibility practices contribute to green innovation? The mediating role of green dynamic capability," Technology in Society, Elsevier, vol. 68(C).
    11. Lu Chen & Yueyue Fu & Yujia Liu & Cui Wang, 2023. "The Impact of Logistics Corporate Social Responsibility on Supply Chain Performance: Using Supply Chain Collaboration as an Intermediary Variable," Sustainability, MDPI, vol. 15(12), pages 1-14, June.
    12. F. Alkaraan & K. Albitar & K. Hussainey & V.G. Venkatesh, 2022. "Corporate Transformation toward Industry 4.0 and Financial Performance: The Influence of Environmental, Social, and Governance (ESG)," Post-Print hal-04445029, HAL.
    13. Yuanyuan Zhang & Zhe Ouyang, 2021. "Doing well by doing good: How corporate environmental responsibility influences corporate financial performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(1), pages 54-63, January.
    14. Yong Hu & Qian Liu, 2023. "Local Digital Economy and Corporate Social Responsibility," Sustainability, MDPI, vol. 15(11), pages 1-20, May.
    15. Refandi Budi Deswanto & Sylvia Veronica Siregar, 2018. "The associations between environmental disclosures with financial performance, environmental performance, and firm value," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 14(1), pages 180-193, March.
    16. DeFond, Mark & Zhang, Jieying, 2014. "A review of archival auditing research," Journal of Accounting and Economics, Elsevier, vol. 58(2), pages 275-326.
    17. Li, Zhenghui & Huang, Zimei & Su, Yaya, 2023. "New media environment, environmental regulation and corporate green technology innovation:Evidence from China," Energy Economics, Elsevier, vol. 119(C).
    18. Sayantan Khanra & Puneet Kaur & Rojers P Joseph & Ashish Malik & Amandeep Dhir, 2022. "A resource‐based view of green innovation as a strategic firm resource: Present status and future directions," Business Strategy and the Environment, Wiley Blackwell, vol. 31(4), pages 1395-1413, May.
    19. Yang Lu & Xue Ning, 2020. "A vision of 6G – 5G's successor," Journal of Management Analytics, Taylor & Francis Journals, vol. 7(3), pages 301-320, July.
    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. Bai, Dongbei & Du, Lizhao & Xu, Yang & Abbas, Shujaat, 2023. "Climate policy uncertainty and corporate green innovation: Evidence from Chinese A-share listed industrial corporations," Energy Economics, Elsevier, vol. 127(PB).
    2. Khurram, Muhammad Usman & Abbassi, Wajih & Chen, Yifan & Chen, Lifeng, 2024. "Outward foreign investment performance, digital transformation, and ESG performance: Evidence from China," Global Finance Journal, Elsevier, vol. 60(C).
    3. Boubaker, Sabri & Liu, Pei-Zhi & Ren, Yi-Shuai & Ma, Chao-Qun, 2024. "Do anti-corruption campaigns affect corporate environmental responsibility? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 91(C).
    4. Regmi, Rupesh & Zhang, Zhuo & Zhang, Hongpeng, 2023. "Entrepreneurship strategy, natural resources management and sustainable performance: A study of an emerging market," Resources Policy, Elsevier, vol. 86(PB).
    5. Laudien, Sven M. & Reuter, Ute & Sendra Garcia, Francisco Javier & Botella-Carrubi, Dolores, 2024. "Digital advancement and its effect on business model design: Qualitative-empirical insights," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    6. Marika Arena & Giovanni Azzone & Sara Ratti & Valeria Maria Urbano & Giovanni Vecchio, 2023. "Sustainable development goals and corporate reporting: An empirical investigation of the oil and gas industry," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(1), pages 12-25, February.
    7. Victoria Bogdan & Luminita Rus & Dana Simona Gherai & Adrian Gheorghe Florea & Nicoleta Georgeta Bugnar, 2023. "A Streamline Sustainable Business Performance Reporting Model by an Integrated FinESG Approach," Sustainability, MDPI, vol. 15(24), pages 1-26, December.
    8. Sam Solaimani, 2024. "From Compliance to Capability: On the Role of Data and Technology in Environment, Social, and Governance," Sustainability, MDPI, vol. 16(14), pages 1-16, July.
    9. Beibei Zhang & Yang Mei & Yuxin Xiong & Yan Liu, 2024. "Can Digital Transformation Promote Service Innovation Performance of Construction Enterprises? The Mediating Role of Dual Innovation," Sustainability, MDPI, vol. 16(3), pages 1-17, January.
    10. Dong, Weiwei & Niu, XiaoQin & Nassani, Abdelmohsen A. & Naseem, Imran & Zaman, Khalid, 2024. "E-commerce mineral resource footprints: Investigating drivers for sustainable mining development," Resources Policy, Elsevier, vol. 89(C).
    11. Meng, Jia & Zhang, ZhongXiang, 2022. "Corporate Environmental Information Disclosure and Investor Response: Empirical Evidence from China's Capital Market," FEEM Working Papers 317842, Fondazione Eni Enrico Mattei (FEEM).
    12. Liu, Yue & Li, Zhi & Huang, Wenxuan, 2024. "Analyzing the influence of environmental protection law amendments on financing efficiency in Chinese industrial enterprises: A retrospective examination," Finance Research Letters, Elsevier, vol. 64(C).
    13. Kevin Koh & Li Li & Xuejiao Liu & Chunfei Wang, 2023. "The Effect of Audit Partner Diversity on Audit Quality: Evidence from China," Abacus, Accounting Foundation, University of Sydney, vol. 59(1), pages 340-380, March.
    14. Yu Sang & Kannan Loganathan & Lu Lin, 2024. "Digital Transformation and Firm ESG Performance: The Mediating Role of Corporate Risk-Taking and the Moderating Role of Top Management Team," Sustainability, MDPI, vol. 16(14), pages 1-18, July.
    15. Ayi Gavriel Ayayi & Mahinda Wijesiri, 2022. "Is there a trade‐off between environmental performance and financial sustainability in microfinance institutions? Evidence from South and Southeast Asia," Business Strategy and the Environment, Wiley Blackwell, vol. 31(4), pages 1552-1565, May.
    16. Cai, Cen & Tu, Yongqian & Li, Zhi, 2023. "Enterprise digital transformation and ESG performance," Finance Research Letters, Elsevier, vol. 58(PD).
    17. Xiaowen He & Weinien Chen, 2024. "Digital Transformation and Environmental, Social, and Governance Performance from a Human Capital Perspective," Sustainability, MDPI, vol. 16(11), pages 1-21, June.
    18. Nilashi, Mehrbakhsh & Ali Abumalloh, Rabab & Keng-Boon, Ooi & Wei-Han Tan, Garry & Cham, Tat-Huei & Cheng-Xi Aw, Eugene, 2024. "Unlocking sustainable resource management: A comprehensive SWOT and thematic analysis of FinTech with a focus on mineral management," Resources Policy, Elsevier, vol. 92(C).
    19. Yong Tan & Amir Karbassi Yazdi & Jorge Antunes & Peter Wanke & Angappa Gunasekaran & Henrique Luiz Corrêa & Giuliani Coluccio, 2024. "The Quest for an ESG Country Rank: A Performance Contribution Analysis/MCDM Approach," Mathematics, MDPI, vol. 12(12), pages 1-24, June.
    20. Chaudhuri, Ranjan & Chatterjee, Sheshadri & Gupta, Shivam & Kamble, Sachin, 2023. "Green supply chain technology and organization performance: Moderating role of environmental dynamism and product-service innovation capability," Technovation, Elsevier, vol. 128(C).

    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:gam:jsusta:v:16:y:2024:i:4:p:1399-:d:1335031. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.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.