Corporate Environmental Responsibility and Financial Performance: Evidence from International Construction

Abstract

The term corporate social responsibility (CSR) has been used for some time across the world, it concerns both environmental and non-environmental issues which allow companies to improve their performance and to deliver enhanced value to society. Notably, corporate environmental responsibility (CER), a derived term from CSR, has attracted attentions of some international industries but rarely been recognized and targeted in construction industry. This paper aims to investigate the impacts of CER on corporate financial performance (CFP) in the international construction market by using panel data of 116 international construction companies (ICCs) from 2014 to 2015. Results show that CER of a company can improve its financial performance up to a certain point, but once the company reach a threshold level of CER, financial performance would be negatively affected. This research help stakeholders clarify the inverse U relationship between CER and CFP, which may offer a win-win situation for both companies and environmental so that a greener and more effective construction market presence will come into being in the near future.