Does it really pay to be green? Determinants and consequences of proactive environmental strategies

Clarkson, Peter M., Li, Yue, Richardson, Gordon D. and Vasvari, Florin P. (2011) Does it really pay to be green? Determinants and consequences of proactive environmental strategies. Journal of Accounting and Public Policy, 30 2: 122-144. doi:10.1016/j.jaccpubpol.2010.09.013

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Author Clarkson, Peter M.
Li, Yue
Richardson, Gordon D.
Vasvari, Florin P.
Title Does it really pay to be green? Determinants and consequences of proactive environmental strategies
Journal name Journal of Accounting and Public Policy   Check publisher's open access policy
ISSN 0278-4254
Publication date 2011-03-01
Year available 2010
Sub-type Article (original research)
DOI 10.1016/j.jaccpubpol.2010.09.013
Open Access Status DOI
Volume 30
Issue 2
Start page 122
End page 144
Total pages 23
Editor Lawrence A. Gordon
Martin Loeb
Place of publication New York, NY, U.S.A.
Publisher Elsevier Science Publishing
Language eng
Subject 150106 Sustainability Accounting and Reporting
910299 Microeconomics not elsewhere classified
Formatted abstract
This study examines what factors affect firms' decisions to adopt a proactive environmental strategy and whether pursuing proactive environmental strategies leads to improved financial performance. Using longitudinal data from 1990 to 2003 for the four most polluting industries in the US (Pulp & Paper, Chemical, Oil & Gas, and Metals & Mining), this research empirically models the causal relations between firms' environmental performance and their financial resources and management capability. Our results show that positive (negative) changes in firms' financial resources in the prior periods are followed by significant improvements (declines) in firm's relative environmental performance in the subsequent periods. In addition, we also find that significant improvements (declines) in environmental performance in the prior periods can lead to improvements (declines) in financial performance in the subsequent periods after controlling for the impact of Granger causality. Finally, 3SLS analysis suggests that the positive association between environmental performance and financial performance is robust. Overall, our results are consistent with predictions of the resource-based view of the firm and indicate that although becoming "green" is associated with improvement in firm performance, such a strategy cannot be easily mimicked by all firms.
© 2010 Elsevier Inc. All rights reserved.
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ
Additional Notes Available online 14 October 2010.

Document type: Journal Article
Sub-type: Article (original research)
Collections: Faculty of Business, Economics and Law -- Publications
Official 2011 Collection
UQ Business School Publications
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Citation counts: TR Web of Science Citation Count  Cited 135 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 165 times in Scopus Article | Citations
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Created: Fri, 05 Nov 2010, 19:13:46 EST by Karen Morgan on behalf of UQ Business School