The Economic Impact of Environmental Policy on Auto industry: An Empirical Study

• In Event: SUSTAINABILITY and CORPORATE SOCIAL RESPONSIBILITY: Environmental Policies and Sustainability Practices.

Abstract

We investigate the impact of the stringency of environmental policy on the financial performance of European automobile manufacturers. We use cross-country sector-level panel data for 71 firms from 18 European countries from 2010 to 2019. We apply a fixed-effect model and then, to address the endogeneity issues, we use the Generalized Method of Moments. our results show that the impact of the stringency of environmental policy on a firm’s financial performance depends on the time horizon: the stringency of environmental policy has a short-term negative impact but a long-term positive impact on a firm’s financial performance.

Authors

• Fahimeh Chomachaei, University of Massachusetts Boston

• Davood Golmohammadi, University of Massachusetts Boston