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Exploring the moderating effect of financial performance on the relationship between corporate environmental responsibility and institutional investors: some Egyptian evidence
Author(s) -
Wahba Hayam
Publication year - 2008
Publication title -
corporate social responsibility and environmental management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.519
H-Index - 73
eISSN - 1535-3966
pISSN - 1535-3958
DOI - 10.1002/csr.177
Subject(s) - business , institutional investor , corporate social responsibility , accounting , positive relationship , environmental reporting , institutional theory , finance , corporate governance , economics , public relations , political science , management , psychology , social psychology
Much of the existing literature has argued that those firms that invest in environmental initiatives attract more institutional investors. A noticeable problem with these studies is the assumption that the relationship between institutional investors and corporate environmental responsibility is a monotonic relationship that does not vary with firm financial performance. Initial findings of this study demonstrated that corporate environmental responsibility exerted a positive and significant coefficient on institutional ownership. However, when an interaction term between environmental responsibility and financial performance was included, the results verified that corporate environmental responsibility has a neutral impact on the preferences of institutional investors. Moreover, by classifying firms into two sub‐groups, according to their financial performance, environmental responsibility was found to have a positive and significant impact on institutional ownership only when financial performance is high. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment.