Firm- and Country-Level Determinants of Green Investments: An Empirical Analysis

Managerial Finance, Vol. 47(11), pp. 1672–1692, 2021

Posted: 27 Oct 2020 Last revised: 22 Jan 2022

See all articles by Sergey Barabanov

Sergey Barabanov

University of St. Thomas

Anup Basnet

University of Surrey

Thomas John Walker

Concordia University, Quebec - Department of Finance

Stefan Wendt

School of Business, Reykjavik University

Wangchao Yuan

Concordia University, Quebec - John Molson School of Business

Date Written: October 9, 2020

Abstract

We explain the determinants of corporate green investments (GI) by using a series of both firm- and country-level factors. Employing environmental expenditures as a proxy for green investments at the firm level, we find that larger firms tend to invest more in green projects, whereas firms that are more profitable are less likely to “go green”. In terms of country-level determinants, we find that GDP per capita and population are positively related with GI, while GDP growth and surface area are negatively associated with GI. Additionally, firms in common-law countries and English-speaking countries invest less in GI than firms in other countries.

Keywords: Green Investments, Sustainability, Environmental Expenditures, Ecological Footprint

JEL Classification: G11, M14, O13

Suggested Citation

Barabanov, Sergey and Basnet, Anup and Walker, Thomas John and Wendt, Stefan and Yuan, Wangchao, Firm- and Country-Level Determinants of Green Investments: An Empirical Analysis (October 9, 2020). Managerial Finance, Vol. 47(11), pp. 1672–1692, 2021 , Available at SSRN: https://ssrn.com/abstract=3719516

Sergey Barabanov

University of St. Thomas ( email )

1000 LaSalle Ave.
Minneapolis, MN 55403
United States
651-962-5042 (Phone)
651-962-5093 (Fax)

Anup Basnet

University of Surrey ( email )

Alexander Fleming Rd
Guildford, GU2 7XH
United Kingdom

HOME PAGE: http://https://www.surrey.ac.uk/people/anup-basnet

Thomas John Walker (Contact Author)

Concordia University, Quebec - Department of Finance ( email )

Montreal, Quebec H3G 1M8
Canada

Stefan Wendt

School of Business, Reykjavik University ( email )

Menntavegur 1
Reykjavik, 101
Iceland

Wangchao Yuan

Concordia University, Quebec - John Molson School of Business ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1M8
Canada

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