تاثیرات تعدیل کننده سودآوری و نفوذ بر روی روابط میان بهره وری محیط زیست و ارزش شرکتی در شرکت های تجاری عمومی مالزی The moderating effect of profitability and leverage on the relationship between eco-efficiency and firm value in publicly traded Malaysian firms

There has been growing expectations by societies over the past two decades on the need for corporations to become more accountable for the environment (Akrout and Othman, 2013). As a fall out of these growing expectations, organisations are beginning to take the initiative and are beefing up their business processes to conform to this trend (Al-Najjar and Anfimiadou, 2012). The organisations have indeed added environmental performance to their previous concerns for quality, service and cost (Brady et al., 1999). Environmental performance viewed from a general perspective means putting in place measures that ensure the sustainability of environmental attributes such as water, soil, air and eco-systems. The reduction of environmental impacts or restoring the ecosystem poses huge demand on the organisation’s resources. This huge spending needs to be accounted for. Engaging in these processes of restoration leads to the emergence of eco-efficiency. The eco-efficiency concept is thus a midpoint between the economy and the environment. International discussions on the environment such as the United Nations Conference on Environment and Development, held by the business council for sustainable development popularised the concept of eco-efficiency because it has now become a key strategy used by business to assess and enhance the environmental performance of their products and services (World Business Council for Sustainable Development, 2002). Derwall et al. (2005) define eco-efficiency as the economic value created by a company from its products and services delivered in relation to the waste generated. In recent times, a large number of potential investors are beginning to consider the idea of socially responsible investing. Nevertheless, the debate whether value is added as a result of environmental consideration to the process of stock selection is still on. One side of the divide believes that any attempt to improve social or environmental performance will be met with reduced shareholder value. A common thought is that a company’s cost of complying with such ethical standards will lead to higher product prices which will place such a company at a disadvantaged position in the industry, leading to lower profitability (Walley and Whitehead, 1994). The other groups are of the opinion that a strategy of improved social or environmental performance can boost a company’s output efficiency or even create a niche in the market (Porter and Van Der Linde, 1995). They assert that an improved environmental performance will lead to a cost-efficient use of the organisation’s resources such that businesses that are environmentally responsible will be able to report higher profits leading to an enhanced value than less-responsible companies. Furthermore, the connection between environmental concerns and performance of the firms has been widely studied with evidence of mixed findings. Although studies have established the link between environmental activity and good financial performance (see for example Al-Najjar and Anfimiadou, 2012; Connelly and Limpaphayom, 2004; Dowell et al., 2000; Konar and Cohen, 2001; Sinkin et al., 2008), others have in contrast reported that such positive relation does not exist (Ingram and Frazier, 1980; Walley and Whitehead, 1994); they assert that remedial actions on the environment require huge costs because the investment in the requisite technology is necessary to engineer green technologies and products to alleviate the dreadful effects on the immediate environment, as well as comply with eco-efficient requirement require huge outlay. For a more detailed understanding of the impact of eco-efficiency on the value of the firm, we introduce two moderating variables into our model. We argue that firm characteristics interplay with environmental strategy of eco-efficiency, affecting the relationship between eco-efficiency and firm value. Thus, we examine the impact of firm-specific characteristics such as leverage and the return on assets on the relationship between eco-efficiency and firm value. In doing so, the current study would expand prior studies on the theoretical implications of corporate environmental policy, including eco-efficiency for enhancing firm value.