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The Economic Impact of Environmentally Responsible Practices

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  • Hajer Tebini
  • Bouchra M'Zali
  • Pascal Lang
  • Blanca Perez‐Gladish

Abstract

The objective of this paper is to present a dynamic analysis of the relationship between environmental (EP) and financial performance (FP). More precisely, we have analysed this relationship by considering the measurement of EP lagged by one, two, and three periods. The introduction of lagged variables at both an aggregate and non‐aggregate level, aims to capture the effects of EP on FP over time. Our results show that the aggregate measure of the lagged EP has a persistent positive effect on FP, extended over three years. This effect appears to be more marked for large size companies, for companies with low risk levels and for those spending less on investment. Results for non‐aggregate measurements reveal an asymmetric relationship between FP and KLD's concerns score, of which the impact is negative and persistent, and between FP and KLD's strengths score, where the effect is positive and limited to one year. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment

Suggested Citation

  • Hajer Tebini & Bouchra M'Zali & Pascal Lang & Blanca Perez‐Gladish, 2016. "The Economic Impact of Environmentally Responsible Practices," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 23(5), pages 333-344, September.
    • Handle: RePEc:wly:corsem:v:23:y:2016:i:5:p:333-344
    DOI: 10.1002/csr.1383
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    2. Nazim Hussain & Ugo Rigoni & Elisa Cavezzali, 2018. "Does it pay to be sustainable? Looking inside the black box of the relationship between sustainability performance and financial performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(6), pages 1198-1211, November.
    3. Yan Jiang & Le Luo, 2018. "Market reactions to environmental policies: Evidence from China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(5), pages 889-903, September.
    4. Claudio Nuber & Patrick Velte & Jacob Hörisch, 2020. "The curvilinear and time‐lagging impact of sustainability performance on financial performance: Evidence from Germany," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(1), pages 232-243, January.
    5. Jonathan Luffarelli & Amrou Awaysheh, 2018. "The Impact of Indirect Corporate Social Performance Signals on Firm Value: Evidence from an Event Study," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(3), pages 295-310, May.
    6. Julien Lachuer & Sami Ben Jabeur, 2022. "Explainable artificial intelligence modeling for corporate social responsibility and financial performance," Journal of Asset Management, Palgrave Macmillan, vol. 23(7), pages 619-630, December.
    7. Derek D. Wang, 2018. "Unravelling the Effects of the Environmental Technology Portfolio on Corporate Sustainable Development," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(4), pages 457-472, July.

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