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In this article, we investigate the financial implication of sustainable environmental practices on UK small and medium‐sized enterprises (SMEs)–traded firms. Existing literature indicates that there is a direct relationship between sustainable environmental practices and financial performance. However, studies looking at this relationship have focused mainly on large firms with little attention paid to SMEs. Further, those looking at environmental and financial performance relationships have often used a single measure of performance in their studies. This study bridges these research gaps by focusing on listed SMEs in the United Kingdom using multiple measures of sustainable environmental policy indices on a panel of 201 SMEs on the Alternative Investment Market from 2011 to 2016. Evidence from our panel data analysis suggests significant and a nonlinear (concave) relationship between sustainable environmental practices and firms' financial performance. Specifically, energy efficiency practices, greenhouse gases, material, and resource efficiency revealed an inverted U‐shaped relationship with financial performance. The results will offer guidance to management in terms of allocating resources to sustainable environmental practices investment.

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This paper examines how cash resources affect the sustainable environmental practices and financial performance of firms listed on the Alternative Investment Market (AIM) in the United Kingdom (UK). The study adopts Ordinary Least Square (OLS) regression model on 201 quoted Small and Medium Enterprises (SMEs) on the UK Alternative Investment Market (AIM) from 2011 to 2016. Consistent with our predictions and confirms with the assertions of the resource-based view, the study documents that cash resources have a positive impact on sustainable environmental practices and financial performance relationships. However, the direction of the regression coefficient was not the same for accounting (ROA) and market-based (Tobin’s q) measures of financial performance. Whereas the moderating impact between cash resources and sustainable environmental practices for ROA was negative, the relationship was positive in the case of Tobin’s q. The study, therefore, concluded that where excessive cash are employed in the management and implementation of environmental sustainability, the financial returns may not be favourable. However, efficient utilisation of cash resources may positively impact on sustainable environmental practices and financial performance relationships. The study also documented that unconstraint firms have a higher probability of benefiting financially from environmental sustainability measures than cash constraint firms. Citation: Danquah Jeff Boakye1, Gabriel Sam Ahinful2 and Randolph Nsor-Ambala3. Sustainable Environmental Practices and Financial Performance Relationships. Are they moderated by Cash Resources? Evidence from Alternative Investment Market in the United Kingdom., 2020; 5(1): 14－29. Received: (February 15, 2020) Accepted: (March 31, 2020)

Purpose: This article investigates the relationship between executive compensation and financial performance for Alternative Investment Market (AIM)-listed firms in the UK. While most studies have looked at the impact of executive compensation on financial performance, this study argues that the issue of reverse causality cannot be ignored even if it is controlled and therefore investigates the extent to which financial performance can also impact on executive remuneration. Design/methodology/approach: The study relies on a sample of 201 AIM-listed firms in the UK from 2011 to 2016 to examine the relationship between executive compensation and financial performance. It draws on agency and tournament theories to model the relationships between executive compensation and financial performance using various panel regression models. Findings: The findings from the study revealed that the chief executive officer (CEO) remuneration impact on both accounting- and market-based measures of financial performance. It also showed that while performance-based incentives like bonus and other long-term incentives linked to performance significantly impact on financial performance, salary, a cash-based non-performance-related compensation rather negatively affects performance. It was also discovered that financial performance can also influence the level of executive compensation and not always vice versa. Value/originality: The study adds novelties to the existing literature by introducing tournament theory to the studies on the relationship between executive compensation and financial performance. Most of the existing studies have been one sided and emphasise only on the influence of executive remuneration on financial performance. However, based on the tournament theory, the study argued that the issue of reverse causality between the two should not be overemphasised even if it is controlled.