The Impact of Investments in Pollution Reduction on Shareholder Wealth: Evidence from Taiwanese Manufacturing Companies

She‐Chih Chiu, Hsuan‐Chu Lin and Chuan‐San Wang

Corporate Social Responsibility and Environmental Management, 2017, vol. 24, issue 6, 676-691

Abstract: This paper investigates the economic benefit of corporate pollution reduction expenditures and the value relevance of the Global Reporting Initiative (GRI) report. It utilizes a unique dataset of pollution reduction expenditures disclosed by Taiwanese manufacturing companies in their GRI reports. Economic profit is measured with Economic Value Added and Tobin's Q. The value relevance is measured with three benchmarks: stock returns, cash flows, and stock prices. The Generalized Method of Moments is adopted to control for potential endogeneity. This paper finds a positive relation between pollution reduction expenditure and corporate economic benefits, which suggests that managerial decisions aimed at pollution reduction are consistent with the interests of shareholders and of stakeholders. In addition, this paper finds that the G3.1 guideline provides relevant information in regard to firm value, while it plays merely a partial role in investors' investment decisions. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://doi.org/10.1002/csr.1436

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:wly:corsem:v:24:y:2017:i:6:p:676-691

Access Statistics for this article

More articles in Corporate Social Responsibility and Environmental Management from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().