Beyond Pays to be Green: Examining Industry-Level Influences on Environmental/Financial Performance

Abstract

One of the most researched questions regarding corporate environmental performance is – Does it pay to be Despite more than three decades of research, prior studies have yielded conflicting results and analytical techniques have been called into question. In this study we aim to answer a more nuanced research question – Under what market conditions does it pay to be green? First, we examine whether industry membership influences the relationship between firm environmental performance and firm financial performance. Next, we analyze three moderating variables (i.e. industry profitability, industry dynamism, and industry environmental regulation and enforcement) to assist in determining the boundary conditions of when and where it pays to be green. We tested our hypotheses using panel data of companies in the SP however...