Environmental Performance and Capital Structure: Evidence From Asia

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Author(s): Naiwei Chen (National Chiayi University, Taiwan)and Min-Teh Yu (National Yang Ming Chiao Tung University, Taiwan)
Copyright: 2022
Pages: 20
Source title: Handbook of Research on Energy and Environmental Finance 4.0
Source Author(s)/Editor(s): Abdul Rafay (University of Management and Technology, Pakistan)
DOI: 10.4018/978-1-7998-8210-7.ch015

Keywords: Accounting and Finance / Business Science Reference / Environment & Agriculture / Environmental Science

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Abstract

This chapter aims to examine the effect of environmental performance (EP) on the capital structure of firms. Non-financial firms of 12 Asian countries over the period of 2007–2018 are used as the study sample. The results indicate that EP generally has a positive effect on the leverage of firms. When country-level variables such as financial system and legal system are considered, the results are more significant. Specifically, EP positively (negatively) affects leverage in civil (common) law countries. EP also positively (negatively) affects leverage in countries with bank-based (market-based) financial systems. A more in-depth analysis further reveals that the financial system plays a more important role than the legal system in determining the effect of EP on leverage.

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Environmental Performance and Capital Structure: Evidence From Asia

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