THE RELATIONSHIP BETWEEN BEING GREEN AND CAPITAL INVESTMENT

Date

2024-2

Author

Yılmaz, Berna Nisa

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This thesis investigates the impact of the greenness of a firm on its real capital investments for the NYSE-listed companies between 2002 and 2021. The study measures greenness by adjusting the Environmental component of a firm’s ESG score to reflect industry and market effects. Two distinct methodologies are utilized to examine the relationship between greenness and investment activities. Findings from the dynamic panel regressions indicate that greener firms tend to invest more, irrespective of how greenness is defined. The quantile regression results suggest that firms with lower levels of capital investment are inclined to increase their investments when they are greener, in contrast to those with higher investment levels. The findings corroborate Pastor, Stambaugh, and Taylor’s (2021) prediction that the market will progressively become greener, influenced by the higher levels of capital investment from greener firms compared to less green, or brown, firms.

Subject Keywords

Sustainable Investing, ESG Score, Greenness Measure, Dynamic Panel System GMM, Quantile Regression

URI

https://hdl.handle.net/11511/108720

Collections

Graduate School of Social Sciences, Thesis