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The Relationship between Water/Energy Reduction and Shareholders' Dividend Yield

Author

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  • Collins C Ngwakwe

    (University of Limpopo, Polokwane, South Africa)

Abstract

In a world of increasing energy and water scarcity, companies are devising new technical and operational strategies to reduce energy and water consumption - especially the ratio of water and energy usage to units of production. Savings derivable from such environmental resource conservation contribute to cost reduction, which invariably result in better financial performance. This paper analysed the relationship between water and energy reduction on dividend yield. Many studies on water and energy efficiency's effect on financial performance have paid little attention to dividend yield - hence this paper contributes to the academic science. The paper applied a positivist paradigm and hence a quantitative approach. Data on energy reduction, water reduction, and dividend yield were from the Coca-Cola financial and sustainability reports for different years. A simple regression analysis was applied to the data analysis. Research results indicate that at an alpha level of 0.05%, energy and water reduction are significantly related to dividend yield. Thus, the increase in the dividend, which emerged from water and energy reduction, has a practical significance for Coca-Cola Company and other beverage industries. The paper provides practical and research recommendations based on which the beverage industry may contribute to environmental resource conservation by devising a strategy to reduce water and energy per unit of production. Furthermore, the paper recommends further study on this concept to apply dividend yield as a financial performance proxy and expand the study time series whilst accommodating other beverage industries.

Suggested Citation

  • Collins C Ngwakwe, 2022. "The Relationship between Water/Energy Reduction and Shareholders' Dividend Yield," Oblik i finansi, Institute of Accounting and Finance, issue 3, pages 56-61, September.
  • Handle: RePEc:iaf:journl:y:2022:i:3:p:56-61
    DOI: 10.33146/2307-9878-2022-3(97)-56-61
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    References listed on IDEAS

    as
    1. 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.
    2. B. C. Peritz, 1992. "On the objectives of citation analysis: Problems of theory and method," Journal of the American Society for Information Science, Association for Information Science & Technology, vol. 43(6), pages 448-451, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    dividend yield; water reduction; energy reduction; resource efficiency; environmental accounting; corporate sustainability;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - 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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