earticle

영어

Green management activities are defined as the activities that have minimal negative effect on environment. They encompass principles of sustainability into business decision, supply of environmentally friendly products or services, and enduring commitment to environmental principles in business operations. The relationship between the green management activities and the financial performance has been an interesting topic for more than decades. Some previous literatures argue that the corporate green management could be classified four measurement strategies. The first one is the use of disclosures, which consists of annual reports, letters to stockholders, and many other disclosures to the public. The second category is the use of reputation indices, such as Fortune magazine ratings of a company's responsibility to environments. The third measure category is observable corporation's processes and outcomes with respect to green management, such as environmental programs. The fourth approach is the principles and values which are inherent in a corporation's culture. This study is related to the second category and examines the relationship between corporate green management and its long-run financial performance in Korea. We use the Sustinvest and Fn-Guide's annual list of “Green Ranking” for 2011 through 2013 to gauge corporate green management activities. Whereas previous studies examined the relationship mainly based on measures of ROA, ROE, and Tobin’s Q, our research utilizes three measures of stock returns, Tobin’s Q, and operating performance on long-run basis. We find that the firms with higher green ranking have insignificantly lower stock returns compared to their matching firms, which is partly consistent with prior studies. More importantly, we report that the firms have higher Tobin’s Q and operating performance compared to their matching firms, which is consistent with prior studies. In addition, previous studies report that firms with green management activities have a higher Tobin’s Q. It means that the green management contributes to the enhancement of firm value. However, the positive relationship between green management and the firm value could be spurious because of endogneity problem. In order to control the endogneity problem, we deliberately use the methodology of random-effects panel regression model with 1-year lag. We also examine the characteristics of the firms involved in green management. Even after controlling the endogeneity problem, we find that the green management activities have a positive impact on Tobin’s Q. While profitability is positively related to Tobin’s Q, firm size and business history are negatively associated with Tobin’s Q. In conclusion, our findings suggest that the firms can enhance long-run financial performance through green management activities.