The effect of the ISO-14001 environmental management system on corporate financial performance

Abstract

This study employed a quasi-experimental design to compare ISO companies with the matched comparison companies on the effect of ISO-14001 registration (independent variable) on financial performance (three dependent variables): Return On Revenue (ROR), Return On Assets (ROA), and Operating Revenue (OPR). Eighty one pairs of companies (N = 162) were collected from the Standard & Poor's (S&P) database, which had at least one ISO certificate and for whom five years of financial data were available. Data on ISO registration indicated a strong pattern of distribution by industry, by years, and by the size of company. Control for initial difference, the results of statistical analyses (ANCOVA, MANOVA, and ANOVA)indicated that registration of ISO-14001 led to lower ROR and ROA in the two-year period, and no change in the third year period. OPR did not change. Early adoption, length of ISO registration and the size of company did not affect the relationship of ISO registration and financial performance.

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