Does it Pay Off to be Environmentally Responsible? : A Study on European Firms
Abstract: This paper investigates the link between environmental aspects of corporate social responsibility (CSR) and corporate financial performance for 160 European companies included in MSCI World from 2003 to 2006. By using the random effects regression model we study different dimensions of environmental risks and opportunities and their effects on corporate operating performance and market value. Environmental industry risk is found to be positively associated with operating performance and negatively associated with market value of the companies. The results also indicate a positive association between environmental and financial performance.
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