"Impact of Firm's Environmental performance on Its Financial Performance: Empirical Evidence from Vietnam's Small and Medium Manufacturing Firms"

Authors: Nham, Phong Tuan
Tran, Hue Chi
Nguyen, Thu Ha

This research has investigated the relationship between ROA, accounting based measure of financial performance in the short term and inspected times, an environmental variable measured by the number of times that a firm was inspected by Environmental Agency. The firm incurred in high inspected times has low environmental compliance. In that sense, this is a negative indicator for environmental performance. Based on different level of environmental performance, this study constructs the "SME_high polluting" (SME_H) and "SME_low polluting" (SME_L) portfolio. The analytical results indicate that better pollution control neither improves nor undermines financial success. SME_H group shows that high-inspected time standing for poor environmental performance has a statistically significant and positive impact on ROA standing for financial performance. This result supports the hypothesis "the lower environmental performance a firm has, the higher its financial performance is". SME_L group, environmental and financial performances are not related statistically. Finally, several implications for SMEs, government sector, and researchers as well as future research direction are also provided...

Link: http://repository.vnu.edu.vn/handle/VNU_123/14231