A Consideration of Environmental Management and Financial Performance (part2)

Summary Both within and outside Japan, there is an increasing recognition of problems associated with environmental wellness. As this recognition expands, conditions that enhance (or limit) a company’s ability to engage in business change, forcing these companies to similarly alter their business practices such that they promote corporate social responsibility with respect to the environment. Hence, environmental problems have become a central issue in corporate management. To address this phenomenon, this paper features an analysis of the degree of the drawing of bill to environmental management and the relationship into base from a financial perspective. In addition, this study seeks to clarify the characteristic tendencies demonstrated by a company that promotes environmental management through its business-related activities. (Null hypothesis) 1: No significant relationship exists between the degree to which a firm promotes environmental responsibility and that firm’s overseas sales ratio. 2: No significant relationship exists between the degree to which a firm promotes environmental responsibility and the number of shares the firm issues. 3: No significant relationship exists between the degree to which a firm promotes environmental responsibility and that firm’s aggregate market value. 4: No significant relationship exists between the degree to which a firm promotes environmental responsibility and that firm’s price/earnings ratio. 5: No significant relationship exists between the degree to which a firm promotes environmental responsibility and that firm’s cash equivalents balance at the end of the fiscal term. Results Analysis results demonstrated that there exists a significant and positive relationship between the degree to which a firm promotes environmental responsibility and its overseas sales ratio, the number of shares it issues, and its cash equivalents balance at the end of the term (all p < .01). As such, Hypotheses 1, 2, and 5 were not supported. In contrast, there was no significant relationship between the degree to which a firm promotes environmental responsibility and the firm’s aggregate market value or price/earnings ratio. These findings provided support for Hypotheses 3 and 4.