The impact of environmental expenditures on performance in the U.S. chemical industry

This study analyzes chemical industry companies with environmental expenditures to determine which ones have better financial performance. In addition, this study uses Data Envelopment Analysis to evaluate the efficiency of firms with and without environmental expenditures. This study also utilizes the Malmquist productivity index (MPI) to analyze firmsʹ productivity change and a bootstrap method to test whether the indexes are statistically significant. Finally, this study divides chemical industry companies into three main categories, based on their products. The results of this study provide significant evidence of a relationship between environmental expenditures and financial performance. The findings suggest that firms with environmental expenditures have better efficiency and productivity. Hence, the study encourages companies in the industry to put more effort into protecting the environment that can be through practicing cleaner production to create higher benefits.