Are environmental aspects value drivers for companies? A review of empirical studies

The management of the value of a firm requires the identification of important value drivers. The main objective of the paper is to find out whether value based management (e.g. shareholder value oriented management) has to take into account environmental aspects. In order to answer this question, the paper will determine whether there is an empirically proven relationship between the economic and environmental performance of companies. The paper is divided into three main parts: The development of a basic theory, the examination of existing empirical results and the concluding integration of theory with empirical results. Basic Theory: To build a basis, the paper first specifies the theoretical connection between economic and environmental performance of companies. Economic performance (e.g. definable by financial statement and/or capital market data) and environmental performance (e.g. definable by operational and strategic data) are linked in a model. Based on the model the influence of environmental aspects on corporate value is examined resulting in seven hypotheses for the relationship of environmental and economic performance. Empirical Results: In order to test the developed theoretical relation, empirical studies are identified and assessed, with regard to the relationship between economic and environmental performance. The research results in 122 studies from all over the world, which are subject to further investigation. The analyzing process includes different steps. First, the studies are divided and reviewed as far as their empirical method and soundness are concerned. Mainly they can be differentiated in regression, event and portfolio studies. Furthermore the study categorizes the environmental and economic variables used in the analyzed studies. Economic measures are divided into the following categories: market based measures (e.g. stock price), accounting based measures (e.g. RoA), accounting and market based measures (e.g. Tobins q), perceived performance measures (i.e. derived from question