Does it Really Pay to Be Green? Determinants and Consequences of Proactive Environmental Strategies

Do Lenders Applaud Corporate Environmental Performance? Evidence from Chinese Private-Owned Firms

“…As a result, CSR can significantly increase economic performance (Deng et al 2013;McGuire et al 1988;Spicer 1978). A steam of extant literature echoes that argument and provides systematic evidence that CSR is positively associated with better financial performance, lower default risk, and more favorable financial support from investors and bankers (Clarkson et al 2011(Clarkson et al , 2013Cochran and Wood 1984;Deng et al 2013;Dhaliwal et al 2014;El Ghoul et al 2011;Flammer 2013;King and Lenox 2008;Kim et al 2014a, b;McGuire et al 1988;Nandy and Lodh 2012;Sharfman and Fernando 2008;Spicer 1978;Sun and Cui 2014;Verwijmeren and Derwall 2010).…”

Business sustainability research: A theoretical and integrated perspective

“…Several studies consisting of Verrecchia (1983), Verrecchia (2001) Einhorn, (2005 Beyer, Cohen, Lys, and Walther (2010), Rezaee and Homayoun (2014) and Rezaee and Tuo (2016) examine the voluntary (nonfinancial) and mandatory (financial) dimensions of sustainability performance information and find that voluntary non-financial and mandatory financial sustainability information complement each other. Furthermore, voluntary disclosure theory, as discussed in the next section, suggests that firms with good CSR/ESG information make the most exhaustive disclosures and thus voluntarily disclose such information to reduce information asymmetry and avoid adverse selection (e.g., Al-Tuwaijri, Christensen, and Hughes, 2004;Clarkson, Li, Richardson, and Vasari, 2011;Verrecchia, 2001). Other studies (e.g., Hopwood, 2009;Gray, 2010;Bebbington and Larrinaga, 2014;) examine the importance of the proper accounting, reporting, and assurance of sustainability information in disclosing relevant financial and non-financial information to all stakeholders.…”

“…Stakeholder theory suggests that sustainability activities and performance enhance the long-term value of the firm by fulfilling the firms' social responsibilities (Campbell, 2007), meeting their environmental obligations (Clarkson et al, 2011), and improving their reputation (Weber, 2008). However, these sustainability activities may require considerable resource allocation that could conflict with shareholder wealth maximization objectives and force management to solely invest in sustainability initiatives that would result in long-term financial sustainability.…”

Do Corporations Invest Enough in Environmental Responsibility?

“…This alleviates the concern, present in analysis of levels, that what we attribute to environmental responsibility should, in fact, be attributed to some unidentified or missing factors. Clarkson et al (2011), unlike Russo and Fouts, Hart and Ahuja, and Waddock and Graves, studied the relation between changes in CER, measured by the sum of all chemicals (in pounds) released by a company into air, water, and land in each year, and subsequent changes in corporate financial performance, measured by profitability, cash flows, and Tobin's Q. They found that increases in CER are followed by increases in corporate financial performance and decreases in CER are followed by decreases in corporate financial performance.…”

“…Why would managers ever decrease levels of CER or refrain from increasing them if higher levels of CER lead to higher levels of corporate financial performance? Clarkson et al (2011) found the answer in a resource-based view of companies. Specifically, companies with constrained resources find it difficult to increase levels of environmental responsibility even if such increases lead to increases in financial performance.…”