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
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: Suggested Citation