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- Publisher
- Springer Journals
- Copyright
- Copyright © The Author(s), under exclusive licence to Springer Nature Limited 2022. Springer Nature or its licensor holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
- ISSN
- 1741-3591
- eISSN
- 1746-6539
- DOI
- 10.1057/s41310-022-00152-6
- Publisher site
- See Article on Publisher Site
Abstract
This study investigates the relationship between environmental performance and financial performance in both linear and quadratic functions in an emerging East Asian market. Accounting-based and market-based measures are utilized to capture two different aspects of financial performance. We extend the existing literature by considering a multidimensional aggregate construct of environmental performance and finding empirical evidence of a U-shaped relationship between environmental performance and financial performance. Accordingly, an increase in environmental performance deteriorates financial performance in the beginning, but after its threshold has been reached, the effect reverses and environmental performance ultimately serves profitability and market value. Our findings would be of interest to firms, investors, and policymakers by emphasizing the role of environmental performance in the improvement of financial performance in the long term.
Journal
International Journal of Disclosure and Governance – Springer Journals
Published: Mar 1, 2023
Keywords: East Asia; Environmental performance; Financial performance; Taiwan; U-shaped relationship; M41; M14