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Environmental and financial performance in the European manufacturing sector: An analysis of extreme tail dependency

Environmental and financial performance in the European manufacturing sector: An analysis of extreme tail dependency
Environmental and financial performance in the European manufacturing sector: An analysis of extreme tail dependency
In this study, we investigate the impact of environmental performance on financial performance. We argue that environmental performance heterogeneously affects firms with different profitability level. Using data for 288 European manufacturing firms over the period 2005-2016, we investigate the said relationship under the financial slack argument and the contrasting paradigms of neoclassical and the instrumental stakeholder theory. Employing a quantile regression framework enriched with a set of instrumental variables to more effectively approximate environmental performance, we find (i) firms with superior environmental performance tend to be more profitable; (ii) the relationship between environmental and financial performance can be characterised as positive and heterogeneous across the conditional distribution; (iii) financial and environmental performance are endogenously related only when high profitability firms are examined.
Financial performance, Environmental Performance, Quantile regressions
0890-8389
1-21
Tzouvanas, Panagiotis
f8c0fae8-aebe-406b-9df5-e40fd4c81fbb
Kizys, Renatas
9d3a6c5f-075a-44f9-a1de-32315b821978
Chatziantoniou, Ioannis
46fa1039-98bb-4997-b9f7-3ead71be79aa
Sagitova, Roza
8078d5ad-a6eb-4c6d-8281-080c0375dd76
Tzouvanas, Panagiotis
f8c0fae8-aebe-406b-9df5-e40fd4c81fbb
Kizys, Renatas
9d3a6c5f-075a-44f9-a1de-32315b821978
Chatziantoniou, Ioannis
46fa1039-98bb-4997-b9f7-3ead71be79aa
Sagitova, Roza
8078d5ad-a6eb-4c6d-8281-080c0375dd76

Tzouvanas, Panagiotis, Kizys, Renatas, Chatziantoniou, Ioannis and Sagitova, Roza (2019) Environmental and financial performance in the European manufacturing sector: An analysis of extreme tail dependency. British Accounting Review, 1-21, [100863]. (doi:10.1016/j.bar.2019.100863).

Record type: Article

Abstract

In this study, we investigate the impact of environmental performance on financial performance. We argue that environmental performance heterogeneously affects firms with different profitability level. Using data for 288 European manufacturing firms over the period 2005-2016, we investigate the said relationship under the financial slack argument and the contrasting paradigms of neoclassical and the instrumental stakeholder theory. Employing a quantile regression framework enriched with a set of instrumental variables to more effectively approximate environmental performance, we find (i) firms with superior environmental performance tend to be more profitable; (ii) the relationship between environmental and financial performance can be characterised as positive and heterogeneous across the conditional distribution; (iii) financial and environmental performance are endogenously related only when high profitability firms are examined.

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Accepted/In Press date: 21 October 2019
e-pub ahead of print date: 24 October 2019
Published date: 24 October 2019
Keywords: Financial performance, Environmental Performance, Quantile regressions

Identifiers

Local EPrints ID: 435263
URI: http://eprints.soton.ac.uk/id/eprint/435263
ISSN: 0890-8389
PURE UUID: 7ff8e280-93f5-4dc2-9b89-ae63480a86ad
ORCID for Renatas Kizys: ORCID iD orcid.org/0000-0001-9104-1809

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Date deposited: 29 Oct 2019 17:30
Last modified: 28 Apr 2022 05:51

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Contributors

Author: Panagiotis Tzouvanas
Author: Renatas Kizys ORCID iD
Author: Ioannis Chatziantoniou
Author: Roza Sagitova

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