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Environmental Compliance and Firm Performance: Evidence from China *
Author(s) -
Yang Xi,
Yao Yang
Publication year - 2012
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/j.1468-0084.2011.00649.x
Subject(s) - endogeneity , certification , porter hypothesis , profitability index , context (archaeology) , china , business , panel data , industrial organization , monetary economics , economics , accounting , productivity , finance , econometrics , macroeconomics , paleontology , management , biology , political science , law
This article evaluates the impact of environmental compliance on firms’ innovation and financial performance using a panel dataset of Chinese firms for the period of 2000–5. Our results show certification of the ISO14000 has a significantly positive impact on firms’ profitability. This finding is robust when we take into account possible endogeneity of certification, effects of export and types of customers, and possible precertification time trends. In addition, we find that certified firms have larger per‐worker sales volumes and market shares in the country, which suggests an alternative mechanism for the Porter hypothesis in the context of a developing economy.