The impact of environmental performance on firm performance: static and dynamic panel data evidence

By Khaled Elsayed, D. Paton. Structural Change and Economic Dynamics, 2005

411 citations recorded by the source corpus.

Abstract There is a long-standing debate on the impact of environmental performance on firm performance. Although previous studies have reported mixed results, many of these papers suffer from model misspecification and/or limited data. A conspicuous gap in the literature is the inability of authors to control for firm heterogeneity and dynamic effects. In this paper, we conduct static and dynamic panel data analysis of the impact of environmental performance on financial performance. Our evidence implies that environmental performance has a neutral impact on firm performance. This finding is consistent with theoretical work suggesting that firms invest in environmental initiatives until the point where the marginal cost of such investments equals the marginal benefit.

Subfields: Economics and Econometrics, Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/89919253e558109173aadb2cd73f1e4538547d09

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Citations in the corpus

CSR and financial performance: complementarity between environmental, social and business behaviours (2014, methodology): “…3323–3338, http://dx.doi.org/10.1080/00036846.2014.927572 © 2014 Taylor & Francis 3323 problems in previous work (see e.g. McWilliams and Siegel, 2000; Elsayed and Paton, 2005; Lockett et al., 2006), including the following: model misspecification (endogeneity), omitted variables in the…”
How Hot Is Your Bottom Line? Linking Carbon and Financial Performance (2011, background): “…indicators for CFP such as Tobin’s q, return on assets, return on sales, or return on equity and a variety of CSP measures (e.g., Dowell, Hart, & Yeung, 2000; Elsayed & Paton, 2005; Hart & Ahuja, 1996; King & Lenox, 2001, 2002; Konar & Cohen, 2001; Russo & Fouts, 1997; Waddock & Graves, 1997).”
Corporate Boards, Ownership Structure and Firm Performance in an Environment of Severe Political and Economic Crisis (2012, positive): “It achieves this by using lagged differences and lagged levels of instrument dependent and independent variables (Elsayed and Paton, 2005; Roodman, 2009; Capezio et al., 2010).”
The effects of corporate governance on financial performance and financial distress: evidence from Egypt (2015, background): “In addition, we include capital intensity, measured as the ratio of net fixed assets to the firm’s total assets (Konar and Cohen, 2001; Elsayed and Paton, 2005; Elsayed, 2007).”
Corporate Social Responsibility and Financial Performance: An Empirical Analysis on Greek Companies (2010, background): “…variables, which includes firm's financial characteristics Moreover we have to point out that we introduce a one-year lag between dependent and independent variables (Elsayed and Paton, 2005; Brammer and Pavelin, 2008; Mahoney and Roberts, 2007; Rodrıguez and Cruz, 2007; Nelling and Webb, 2009).”
Analyzing the Effect of Corporate Environmental Performance on Corporate Financial Performance in Developed and Developing Countries (2017, background): “ELSAYED AND PATON (2005) [24] 290 UK firms 1994–2000 Tobin’s Q (1) ROA (2) ROS Environmental score of Management Today (reputation) Size, R&D ratio, advertising ratio, industry, leverage, capital ratio Dynamic generalised method of moments (GMM) estimator No relation (1) Negative (2) No relation”
Looking for evidence of the relationship between corporate social responsibility and corporate financial performance in an emerging market (2011, methodology): “According to Elsayed and Paton (2005), the general approach in financial performance studies, and in the area of industrial organization, the dynamic effects Model 1 ROA Model 2 Ri Model 3 Q Variables FE model RE model FE model RE model FE model RE model C 20.1018 * * * 20.1033 * * 23.8868 * * *…”
Sustainable Development and Financial Markets (2016, background): “Some researchers find support for a positive link (Dowell, Hart, & Yeung, 2000), some propose a negative link (Walley & Whitehead, 1994), yet others cannot detect a clear effect or find a neutral link (Elsayed & Paton, 2005).”
Revisiting the impact of ESG on financial performance of FTSE350 UK firms: Static and dynamic panel data analysis (2021, methodology): “However, our study improves on Elsayed and Paton (2005) by using recent and large sample data of UK firms as well as considering the four individual dimensions of ESG in the analysis and further revealing the moderating role of firm size in the relationship between ESG and corporate financial…”