The current study aims to answer dual, related questions: Does corporate environmentalpolicy affect corporate reputation, and does this link also influence riskadjustedprofitability and company's risk? With a comprehensive framework involvinganalyses of each question, among a sample of firms traced by the Reputation Institute,this study reveals several notable results, after correcting for endogeneitybiases. First, environmental engagement and green product innovation are both antecedentsof corporate reputation. Second, corporate reputation has a positive impacton risk-adjusted profitability and Z score indicator of financial distress risk. Thus, corporateenvironmental responsibility and green practices represent cospecializedassets that enhances an intangible asset, namely, corporate reputation. The latterinfluence constitutes a missing link between sustainable development and the firm'sfinancial performance. Overall, environmental engagement and corporate reputationact as insurance-like protections of firm competitiveness.

How do corporate environmental policy and corporate reputation affect risk-adjusted financial performance?

Varrone N.
2020-01-01

Abstract

The current study aims to answer dual, related questions: Does corporate environmentalpolicy affect corporate reputation, and does this link also influence riskadjustedprofitability and company's risk? With a comprehensive framework involvinganalyses of each question, among a sample of firms traced by the Reputation Institute,this study reveals several notable results, after correcting for endogeneitybiases. First, environmental engagement and green product innovation are both antecedentsof corporate reputation. Second, corporate reputation has a positive impacton risk-adjusted profitability and Z score indicator of financial distress risk. Thus, corporateenvironmental responsibility and green practices represent cospecializedassets that enhances an intangible asset, namely, corporate reputation. The latterinfluence constitutes a missing link between sustainable development and the firm'sfinancial performance. Overall, environmental engagement and corporate reputationact as insurance-like protections of firm competitiveness.
2020
companies' risk
corporate reputation
corporate social responsibility
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/20.500.12607/4652
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