Do Higher Financial Returns Lead to Better Environmental Performance in North America’s Forest Products Sector?

J. Yamaguchi, G.C. van Kooten

Research output: Contribution to journalArticleAcademicpeer-review

6 Citations (Scopus)

Abstract

This study examines the relation between corporate environmental performance and corporate financial (economic) performance in North America’s forest products industry to determine whether there is a firm-level environmental Kuznets curve (EKC). An unbalanced panel of firm-level observations is constructed using data from PricewaterhouseCoopers, the US Environmental Protection Agency, and Environment Canada. The analysis focuses on methanol and formaldehyde emissions because these are the only pollutants for which consistent firm-level data are available in forestry. We find strong evidence of a firm-level EKC. The evidence is considerably weaker if endogeneity related to the effect of past pollution on current pollution or endogeneity resulting from a possible circular relationship between rate of return and pollution is taken into account, although the available time horizon is too short to conclude that endogeneity is a problem. Even so, there remains evidence of a negative relationship between financial performance and environmental performance for formaldehyde
Original languageEnglish
Pages (from-to)2515-2525
JournalCanadian Journal of Forest Research
Volume38
Issue number9
DOIs
Publication statusPublished - 2008

Keywords

  • panel-data
  • specification
  • econometrics
  • tests

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