Environmental Efficiency, Firm Efficiency, and Managerial Ability^*

Abstract

The purpose of this study is twofold. First, the author posits and finds a significant positive relation between environmental performance (i.e., environmental efficiency) and firm performance (i.e., firm efficiency) by using a large panel sample from 1987 to 2015. The results are consistent with the notion in prior research (e.g., Porter, 1991; Porter & van der Linde, 1995) that pollution indicates a form of resource inefficiency and reducing pollution can increase firm performance. Second, managerial ability has recently received tremendous research attention. The author investigates the impact of managerial ability on the relation between environmental efficiency and firm efficiency and finds that the results are mainly driven by firms with low managerial ability.

Citation

Sun, L. (2019), "Environmental Efficiency, Firm Efficiency, and Managerial Ability^*", Lehman, C.R. (Ed.) Beyond Perceptions, Crafting Meaning (Advances in Public Interest Accounting, Vol. 21), Emerald Publishing Limited, Leeds, pp. 105-138. https://doi.org/10.1108/S1041-706020190000021005