Does Water Matter? The Impact of Water Vulnerability on Corporate Financial Performance

Liyuan Zheng, Ling Ye, Mengjiao Wang (), Yingdi Wang and Haiwei Zhou
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Liyuan Zheng: Business School, Hohai University, Nanjing 211100, China
Ling Ye: College of Environment, Hohai University, Nanjing 210098, China
Mengjiao Wang: Business School, Hohai University, Nanjing 211100, China
Yingdi Wang: School of Public Health and Nursing, Yangzhou University, Yangzhou 225012, China
Haiwei Zhou: Business School, Hohai University, Nanjing 211100, China

IJERPH, 2022, vol. 19, issue 18, 1-19

Abstract: This study aims to understand the potential relationship between water vulnerability and corporate financial performance for listed companies in China. Studies have argued that water risk has begun to affect the sustainability of firms, but few studies have included water conditions in the research framework to examine whether and how water conditions have a direct impact on firms. In addition, studies on environment governance have emphasized the impact of government environmental regulation on firms. This study focuses on both regulation and government investments that have been previously neglected. Using a sample of Chinese listed companies from 2016 to 2020, this paper uses pooled cross-sectional regressions with year and industry fixed effects to examine the effects of water vulnerability on corporate financial performance and analyze the mechanism of government water governance (which can be divided into water regulation and water investment) on the relationship between water vulnerability and corporate financial performance. This study finds that water vulnerability could negatively impact corporate financial performance, and water regulation can intensify but water investment couldn’t significantly relieve the negative impact. The relationships above differ between SOEs and non-SOEs and water-intensive and non-water-intensive industries.

Keywords: water vulnerability; water governance; corporate financial performance; water regulation; water investment; water risk; sustainability; SOEs; water-intensive industry (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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