From commitment to capital: does environmental innovation reduce corporate cash holdings?

Ijaz Ur Rehman, Faisal Shahzad, Muhammad Abdullah Hanif, Narmeen Khalid and Faisal Nawaz

Journal of Sustainable Finance & Investment, 2025, vol. 15, issue 1, 22-51

Abstract: Using 7066 firm-year observations of the US-listed firms for the period of 2008–2021, we examine a channel through which eco-innovation affects Corporate Cash holding. More specifically, we modeled the role of goodwill between eco-innovation and Corporate Cash holding. Using a random effect regression model, we show the economically relevant and statistically significant negative impact of eco-innovation on firm-level cash holdings. We provide evidence that goodwill fully mediates the relationship between eco-innovation and cash holdings. Our analyses further document that the impact of eco-innovation on firm-level cash holdings is more pronounced for the firms that operate in environmentally insensitive industries. The influence of eco-innovation on cash holdings is less for low-size firms relative to the high size and more for highly leveraged firms. The results are robust for alternative measures of eco-innovation, selection biases and potential endogeneity. The findings have imperative implications for stakeholders’ engagement from a social capital perspective.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/20430795.2024.2405088 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jsustf:v:15:y:2025:i:1:p:22-51

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TSFI20

DOI: 10.1080/20430795.2024.2405088

Access Statistics for this article

Journal of Sustainable Finance & Investment is currently edited by Dr Matthew Haigh

More articles in Journal of Sustainable Finance & Investment from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().