Journal
CORPORATE SOCIAL RESPONSIBILITY AND ENVIRONMENTAL MANAGEMENT
Volume 28, Issue 1, Pages 54-63Publisher
WILEY
DOI: 10.1002/csr.2031
Keywords
corporate environmental responsibility; corporate financial performance; corporate reputation; favorability; prominence
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Funding
- National Natural Science Foundation of China [71702180]
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The study found that corporate environmental responsibility can indirectly influence financial performance by enhancing a firm's reputation, especially when reputation levels are high.
The natural resource-based view suggests a relationship between corporate environmental responsibility (CER) and corporate financial performance (CFP), because intangible assets accrued by a firm constitute competitive advantages. However, the role of corporate reputation as a valuable intangible asset in the CER-CFP link has yet to be examined. We fill this gap by examining the effect of a firm's reputation in terms of prominence and favorability in interactively mediating the CER-CFP link. Using a sample of 10,995 firm-year observations in China, we find that CER enhances a firm's prominence and favorability, through which CER indirectly improves CFP. Additionally, the results of moderated mediation analysis indicate that the indirect effect of CER on CFP via improving prominence (favorability) is more positive and significant in high levels of favorability (prominence) than in low levels.
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