Powering profits: how renewable energy boosts financial performance in European non-financial companies

Issa, Ayman; Hanaysha, Jalal Rajeh

doi:10.1108/ijaim-03-2023-0055

Cited by 16 publications

(9 citation statements)

References 68 publications

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“…The negative association between corporate environmental initiatives and actual carbon emissions signifies that companies with robust carbon reduction initiatives are more likely to achieve tangible and measurable improvements in their environmental performance. This not only enhances their environmental reputation but also contributes to their long-term resilience and competitiveness in a world increasingly focused on sustainable business practices (Issa and Hanaysha, 2023b).…”

Section: Resultsmentioning

confidence: 99%

“…The study also looks at the moderating impact of board and executive gender diversity on the actual carbon performance, where BGD and CEOG are measured by the proportion of women on the board and the proportion of women executives to the total number of executives, respectively. We follow previous studies (Haque and Ntim, 2022; Issa and Hanaysha, 2023b; Kyaw et al , 2022; Nuber and Velte, 2021) to adopt control variables in this study. Corporate governance traits like board size (B_SIZE), CEO duality (CEOD), board meetings (B_MEET), board independence (B_IND), the presence of a CSR committee of the board (CSR_COM) and the existence of CSR external audit (CSR_AUDIT) are used.…”

Section: Methodsmentioning

confidence: 99%

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From words to action: unpacking the real impact of sustainability initiatives on carbon emissions reduction

Issa,

In'airat

2023

SRJ

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Purpose The purpose of this study is to analyze the correlation between a company’s efforts to reduce carbon emissions and its actual carbon performance. Additionally, the study investigates how female decision-makers may influence this relationship as moderators. Design/methodology/approach This study uses a data set consisting of 1,258 observations from companies listed on the STOXX Europe 600 index between 2009 and 2021. The study applies the ordinary least squares technique to investigate the connection between carbon reduction initiatives and actual carbon performance, taking into account the potential impact of board and executive gender diversity. To ensure the reliability of the findings, subsample analysis and a two-step generalized method of moments technique were used. Findings The results show a significant negative association between a firm’s commitment to environmental initiatives and its carbon emission intensity. Furthermore, the study explores the moderating effect of board and executive gender diversity on this relationship and finds that gender diversity has a significant negative impact on the relationship between emissions reduction initiatives and carbon emissions. Practical implications The study has practical implications for corporate sustainability efforts. It highlights the importance of implementing carbon reduction initiatives to effectively mitigate carbon emissions. This emphasizes the need for sustainable business strategies that prioritize environmental initiatives. Additionally, the study underscores the positive impact of gender diversity in leadership positions on carbon reduction efforts. Policymakers and organizations can leverage these findings to promote gender diversity and enhance sustainability practices. Social implications It provides evidence-based insights for policymakers to develop specific policies and action plans in priority areas such as climate change and emissions reduction. It also highlights the positive influence of gender diversity in corporate leadership on environmental initiatives, promoting inclusivity and equality in sustainability practices. Originality/value This study brings originality by investigating the direct impact of a company’s carbon reduction initiatives on its carbon performance. It also explores the moderating effect of board and executive gender diversity on this relationship. The study provides evidence-based insights for policymakers and applies neo-institutional theory to analyze the interplay between carbon reduction initiatives, carbon emissions and gender diversity in executive and board positions.

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Section: Resultsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

From words to action: unpacking the real impact of sustainability initiatives on carbon emissions reduction

Issa,

In'airat

2023

SRJ

Self Cite

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“…According to recent studies, there is growing evidence that reducing carbon emissions can have a positive impact on financial performance and market valuation (Adu et al , 2022b; Haque and Ntim, 2020; Huang, 2021; Saka and Oshika, 2014; Issa and Hanaysha, 2023c). Several potential factors have been suggested in the literature that may explain how reducing carbon emissions can affect short- and long-term financial performance.…”

Section: Empirical Literature and Hypothesis Developmentmentioning

confidence: 99%

Sustainability performance, executive compensation, market value, and say-on-pay voting adoption: evidence from the STOXX Europe 600

Issa,

Hanaysha

2023

Self Cite

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Purpose This study aims to investigate the link between carbon emissions and market value for nonfinancial companies in the STOXX Europe 600 index, with a specific focus on the moderating effect of executive compensation. Design/methodology/approach To achieve the study’s purpose, this study uses data from the STOXX Europe 600 index between 2010 and 2021. The researchers use ordinary least squares regression analysis to examine the relationship between carbon emissions and market value while taking into account the moderating effect of executive compensation. The study also uses additional tests, such as the dynamic two-step system generalized method of moments regression and the difference in differences method. Findings The study reveals four key findings. First, there is a statistically significant negative relationship between carbon emissions and market value. Second, executive compensation has a negative moderating effect on the association between carbon emissions and market value. Third, Say-on-Pay regulations can encourage companies to adopt environmentally responsible practices, which can positively impact their market value. Finally, the study shows that the Paris Agreement motivates companies to prioritize sustainability, leading to potentially higher market values for those that are more environmentally responsible. Practical implications This study highlights the importance of considering environmental sustainability in corporate decision-making. It suggests that prioritizing sustainability can lead to financial benefits, as companies with lower carbon emissions tend to have higher market values. The findings also have important implications for regulators and investors. Originality/value This study provides novel insights into the link between carbon emissions and market value and the moderating effect of executive compensation. It also sheds light on the potential impact of Say-on-Pay regulations and the Paris Agreement on corporate sustainability practices and market values.

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“…Accordingly, this study used simultaneous equation models with OLS and 2SLS estimates. 2SLS was included to capture the interdependence, if any, of CG mechanisms and CSR, and the two estimates were used in a complementary manner (Noja et al, 2020;Issa and Hanaysha, 2023).…”

Section: Study Estimationsmentioning

confidence: 99%

The effect of corporate governance, corporate social responsibility and information asymmetry on the value of Indonesian-listed firms

Lahjie,

Natoli,

Zuhair

2023

IJAIM

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Purpose This study aims to examine the influence of corporate governance (CG) and corporate social responsibility (CSR) on firm value while accounting for the impact of information asymmetry. Design/methodology/approach This empirical analysis is based on 1,079 observations from 83 listed Indonesian firms for the period 2007–2019. The authors applied simultaneous equation models with ordinary least squares and two-stage least squares. Findings The authors present empirical evidence of CG mechanisms that significantly contribute to low levels of CSR. Moreover, the authors identify a significant impact of information asymmetry on the relationship between CG, CSR and firm value. Research limitations/implications The results show that information asymmetry, CG and CSR do not necessarily result in improved firm value across boards. Moreover, the employment of a nonlinear Cobb–Douglas-type function indicated diminishing marginal returns. Practical implications The findings can help policymakers in developing countries in improving the monitoring and supervisory roles of CG mechanisms to provide more support to CSR, increasing regulatory pressures for improved CSR performance and reducing information asymmetry by adopting a standardized CSR reporting scheme. Social implications The suggested implications can contribute to more sustainable practices among Indonesian-listed firms as well as improving relationships with consumers and stakeholders toward the practice of CSR. Originality/value The adoption of a comprehensive CSR measurement tool to examine the value of CSR contributes to the extant literature, along with examining the impact of information asymmetry on the relationship between CG, CSR and firm value in a developing country context.

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Powering profits: how renewable energy boosts financial performance in European non-financial companies

Cited by 16 publications

References 68 publications

From words to action: unpacking the real impact of sustainability initiatives on carbon emissions reduction

From words to action: unpacking the real impact of sustainability initiatives on carbon emissions reduction

Sustainability performance, executive compensation, market value, and say-on-pay voting adoption: evidence from the STOXX Europe 600

The effect of corporate governance, corporate social responsibility and information asymmetry on the value of Indonesian-listed firms

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