Author(s)

Ting Ting Chen, Tomonori Honda, Eiji Hosoda, Kohji Hayase

Faculty of Economics, Keio University, Tokyo, Japan.
Graduate School of Integrated Arts and Sciences, Hiroshima University, Higashi, Hiroshima, Japan.
Research Institute of Science for Safety and Sustainability, National Institute of Advanced Industrial Science and Technology, Tsukuba, Japan.

We empirically investigate the relationship between environmental management and economic performance using such data as environmental rating, credit rating, and accumulated earnings ratio of companies listed in the manufacturing sector on the first section of the Tokyo Stock Exchange. We performed a path analysis using two types of structural equation modeling: Model A with a terminal economic performance path and Model B with a terminal environmental management path. As a result, we found that Model B has better goodness of fit in the path analysis than does Model A. This is because it is natural to place the economic performance path before the environment management path since companies pursue profits for stockholders. We also confirmed that in Model B, the path from the accumulated earnings rate to environmental management has a significantly negative coefficient. This suggests that two groups of enterprises exist: profit-oriented and environment-oriented companies. Since our results are based on Japanese companies, it is advisable to investigate further to generalize the results worldwide.

Accumulated Earnings Ratio, Environment Management, Economic Performance, Company Size, Sustainable Management

Chen, T. , Honda, T. , Hosoda, E. and Hayase, K. (2014) The Relationship between Environmental Management and Economic Performance: A New Model with Accumulated Earnings Ratio. Journal of Human Resource and Sustainability Studies, 2, 59-69. doi: 10.4236/jhrss.2014.22006.