Work

Greenness and capital investment decisions: Evidence from NYSE firms

Year: 2025

Type: article

Abstract: This study explores the impact of greenness on real capital investment on all New York Stock Exchange (NYSE) firms between 2002 and 2021. We measure the greenness of a firm by adjusting the environmental component of its environmental, social, and governance (ESG) score for industry and market effects. The relationship between greenness and investment is examined using two different methodologies. The dynamic panel regression results show that green firms invest more, regardless of how greenness is defined. The quantile regression results imply that companies that have lower levels of capital investment tend to invest more when they are greener, compared to companies that have higher levels of capital investment. The findings of the study are consistent with Pastor, Stambaugh, and Taylor's (2021) prediction that the market will become greener over time because greener firms have higher levels of capital investment compared to brown firms.

Source: Borsa Istanbul Review

DOI: 10.1016/j.bir.2025.07.013

Authors: Berna N. Yılmaz, Seza Danışoğlu

Institution: Middle East Technical University

Language: English

Topic: Sustainable Finance and Green Bonds

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: gold

Estimated APC paid: $1,500