Corporate Environmental Responsibility and Firm Performance in the Financial Services Sector
Hoje Jo (),
Hakkon Kim () and
Kwangwoo Park ()
Journal of Business Ethics, 2015, vol. 131, issue 2, 257-284
Abstract:
In this study, we examine whether corporate environmental responsibility (CER) plays a role in enhancing operating performance in the financial services sector. Because achieving success with CER investing is often a long-term process, we maintain that by effectively investing in CER, executives can decrease their firms’ environmental costs, thereby enhancing operating performance. By employing a unique environmental dataset covering 29 countries, we find that the reducing of environmental costs takes at least 1 or 2 years before enhancing return on assets. We also find that reducing environmental costs has a more immediate and substantial effect on the performance of financial services firms in well-developed financial markets than in less-developed financial markets. These results are economically and statistically significant and robust even after alleviating endogeneity and using an additional performance measure. We interpret our empirical results as supporting the social impact and reputation-building hypothesis. Our findings also suggest that policy makers dealing with corporate sustainability management should pursue an environment-centered industry policy not only at the manufacturing sector but also at the financial services sector, as firms in both sectors with lower environmental costs perform better. Copyright Springer Science+Business Media Dordrecht 2015
Keywords: Corporate environmental responsibility; Environmental costs; Financial performance; Corporate social responsibility; Environmental sustainability management (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (96)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jbuset:v:131:y:2015:i:2:p:257-284
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DOI: 10.1007/s10551-014-2276-7
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