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    Do environmentally sustainable practices lead to financially less constrained firms? International evidence

    Access Status
    Fulltext not available
    Authors
    Banerjee, R.
    Gupta, K.
    Mudalige, Priyantha
    Date
    2019
    Type
    Journal Article
    
    Metadata
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    Citation
    Banerjee, R. and Gupta, K. and Mudalige, P. 2019. Do environmentally sustainable practices lead to financially less constrained firms? International evidence. International Review of Financial Analysis. 68: Article No. 101337.
    Source Title
    International Review of Financial Analysis
    DOI
    10.1016/j.irfa.2019.03.009
    ISSN
    1057-5219
    Faculty
    Faculty of Business and Law
    School
    School of Economics, Finance and Property
    URI
    http://hdl.handle.net/20.500.11937/79958
    Collection
    • Curtin Research Publications
    Abstract

    In this study, we utilise a comprehensive dataset from 41 countries spanning 2002–2013 and show that environmentally sustainable practices (ESP) are negatively associated with financial constraints of firms. We refine ESP into three components: emission reduction, product innovation and resource reduction, and show that firms which are more innovative and efficient in reducing wastage of resources are most benefited by ESP. The findings are even stronger for firms operating in countries with high institutional qualities, in high emission and highly competitive industries. These results are important to lending institutions for making financing decisions. Policymakers and investors could also utilise ESP as a key distinguishing factor for firms to benefit from lower financial constraints. Appropriate support and initiatives from local and national regulators could motivate firms to be more environmentally friendly.

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