Does corporate environmentalism affect corporate insolvency risk? The role of market power and competitive intensity

Little is known about the effects of green performance on corporate insolvency risk. This study examines the relationship between green performance and firm insolvency risk from both theoretical and empirical perspectives. Using a panel of 179 US firms included in the Newsweek Green Rankings and a s...

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Bibliographic Details
Published inEcological economics Vol. 189; p. 107182
Main Authors Aziz, Saqib, Rahman, Mahabubur, Hussain, Dildar, Nguyen, Duc K.
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.11.2021
Elsevier
Subjects
Economics and Finance
Green performance
Humanities and Social Sciences
Industry competitiveness
Insolvency risk
Market share
Z-score
Z-score
Green performance
Market share
Industry competitiveness
Insolvency risk
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Summary:Little is known about the effects of green performance on corporate insolvency risk. This study examines the relationship between green performance and firm insolvency risk from both theoretical and empirical perspectives. Using a panel of 179 US firms included in the Newsweek Green Rankings and a system generalised method of moments estimation which generates endogeneity-robust regression coefficients, we found that firms with higher green performance are at lower risk of insolvency. We further postulate and provide theory-based empirical evidence that the nexus between green performance and insolvency risk is contingent upon other internal and external boundary conditions. Specifically, this research documents that the nexus between green performance and firm insolvency risk is moderated by market power as well as industry competitive intensity. The results of this study are robust across several sensitivity analyses.
ISSN:0921-8009
1873-6106
DOI:10.1016/j.ecolecon.2021.107182