Understanding the impact of pollutants: the effect of air, water and waste pollutants on international firm performance

Abstract: This study investigates how different type of pollutants influence international firm performance. The dataset covers 1804 firms from 43 countries and 20 industries. Five different types of pollutants are used as well as five different financial performance measures. The paper uses industry-specific fixed effects as estimation method and finds that the type of pollutant influences the relationship between environmental performance and firm performance. In general, the relationship between pollutants and firm performance is negative, however water pollutants are an exception. Moreover, pollutants appear to be more negatively correlated with accounting performance measures than with market performance measures. Additionally, two country level factors show that the country of origin matters.