Corporate environmental performance, governance and financing decisions: Empirical evidence from France

Abstract

This study examined the impact of corporate environmental performance and its specific areas, namely emission reduction, resource use and environmental innovation, on firm financing decisions. We used the System Generalised Method of Moments (GMM) to analyse data from French firms listed on the SBF120 index between 2010 and 2019. Our findings indicate that corporate environmental performance is positively associated with debt financing. Additionally, each environmental dimension influences debt use in distinct ways. Finally, good corporate governance strengthens the positive relationship between environmental performance and debt financing. Our results are robust across different financing measures and subsample analyses. This study provides new insights into the corporate governance-environmental performance nexus, offering important managerial and policy implications.