Firm- and country-level determinants of green investments: an empirical analysis

Purpose This study aims to examine the determinants of corporate green investments (GI) by using a series of both firm- and country-level factors. Design/methodology/approach The authors collect information on environmental expenditures of 763 firms from 40 countries and use random effects regressions to identify the determinants of GI. Findings The authors find that larger firms tend to invest more in green projects, whereas firms that are highly valued or more profitable are less likely to go green. In terms of country-level determinants, we find that the gross domestic product (GDP) per capita and population are positively related with GI, while GDP growth and surface area are negatively associated with GI. Additionally, firms in common-law countries and English-speaking countries make fewer GI than firms in other countries. Social implications The findings of this research not only contribute to the academic literature in these areas, but also have important implications for both regulators and policymakers in countries that exhibit sub-par GI or who otherwise aim to increase GI by firms operating in their country. Originality/value The authors identify and explore the key determinants of GI from both a firm- and country-level perspective.