Determinants of Environmental Investment: Evidence from Europe

Journal of Cleaner Production, forthcoming

The University of Auckland Business School Research Paper

27 Pages Posted: 27 Jan 2021

See all articles by Md. Borhan Uddin Bhuiyan

Md. Borhan Uddin Bhuiyan

Massey University; affiliation not provided to SSRN

Hedy Jiaying Huang

School of Accountancy, Albany Campus

Charl de Villiers

University of Auckland Business School

Date Written: 2021

Abstract

This study investigates the corporate governance determinants of environmental investment in European firms. Using a sample of firms listed on the Bloomberg European Index 500 from 2001 to 2015, this study finds that firms with more independent directors, and female directors, are likely to invest more in the environment. It also finds that environmental investment is likely to be higher in firms with an environmental sub-committee of the board. Finally, this study documents that firms with CEO bonus plans linked to environmental compliance/performance are likely to incur higher environmental investment. The findings are robust to several alternative measures and methods. The findings of this study made a significant contribution to the environmental investment literature by adopting a quantifiable and non-biased monetary measure of environmental investment. Moreover, this study contributes to the literature by providing generalizable empirical evidence for a significantly positive association between a range of corporate governance characteristics and the level of environmental investment. Therefore, the findings of this study have practical implications to institutional investors.

Keywords: Environmental investment, board independence, female directors, environmental sub-committee

JEL Classification: G34, M49, Q56

Suggested Citation

Bhuiyan, Md. Borhan Uddin and Bhuiyan, Md. Borhan Uddin and Huang, Hedy Jiaying and de Villiers, Charl, Determinants of Environmental Investment: Evidence from Europe (2021). Journal of Cleaner Production, forthcoming, The University of Auckland Business School Research Paper, Available at SSRN: https://ssrn.com/abstract=3769679

Md. Borhan Uddin Bhuiyan

Massey University ( email )

School of Accountancy
Auckland, AK Auckland 0745
New Zealand
+6494140800 (Phone)

affiliation not provided to SSRN

Hedy Jiaying Huang

School of Accountancy, Albany Campus ( email )

Auckland
New Zealand

Charl De Villiers (Contact Author)

University of Auckland Business School ( email )

12 Grafton Rd
Private Bag 92019
Auckland, 1010
New Zealand

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