Greenness and capital investment decisions: Evidence from NYSE firms

YILMAZ B. N., DANIŞOĞLU S.

Borsa Istanbul Review, 2025 (SSCI) identifier

  • Publication Type: Article / Article
  • Publication Date: 2025
  • Doi Number: 10.1016/j.bir.2025.07.013
  • Journal Name: Borsa Istanbul Review
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, EconLit, Directory of Open Access Journals
  • Keywords: Capital investment, Dynamic panel system generalized method of moments, Environmental pillar score, Greenness measure, Quantile regression, Sustainable investing
  • Middle East Technical University Affiliated: Yes

Abstract

This study explores the impact of greenness on real capital investment on all New York Stock Exchange (NYSE) firms between 2002 and 2021. We measure the greenness of a firm by adjusting the environmental component of its environmental, social, and governance (ESG) score for industry and market effects. The relationship between greenness and investment is examined using two different methodologies. The dynamic panel regression results show that green firms invest more, regardless of how greenness is defined. The quantile regression results imply that companies that have lower levels of capital investment tend to invest more when they are greener, compared to companies that have higher levels of capital investment. The findings of the study are consistent with Pastor, Stambaugh, and Taylor's (2021) prediction that the market will become greener over time because greener firms have higher levels of capital investment compared to brown firms.