Does corporate environmentalism affect corporate insolvency risk? The role of market power and competitive intensity

Saqib Aziz (1) , Mahabubur Rahman (1) , Dildar Hussain (1) , Duc Nguyen (2, 3)

1 ESC [Rennes] - ESC Rennes School of Business
2 IPAG Business School
3 VNU - Vietnam National University [Hanoï]

Little is known about the effects of green performance on corporate insolvency risk. This study examines the relationship between green performance and firm insolvency risk from both theoretical and empirical perspectives. Using a panel of 179 US firms included in the Newsweek Green Rankings and a system generalised method of moments estimation which generates endogeneity-robust regression coefficients, we found that firms with higher green performance are at lower risk of insolvency. We further postulate and provide theory-based empirical evidence that the nexus between green performance and insolvency risk is contingent upon other internal and external boundary conditions. Specifically, this research documents that the nexus between green performance and firm insolvency risk is moderated by market power as well as industry competitive intensity. The results of this study are robust across several sensitivity analyses.

Mots clés: Green performance; Insolvency risk; Market share; Industry competitiveness; Z-score

Domaines: Economies et finances

Saqib Aziz, Mahabubur Rahman, Dildar Hussain, Duc Nguyen. Does corporate environmentalism affect corporate insolvency risk? The role of market power and competitive intensity. Ecological Economics, 2021, 189, pp.107182. ⟨10.1016/j.ecolecon.2021.107182⟩. ⟨hal-03344206⟩