Unleashing the Mechanism in Green Finance,Corporate Social Responsibility and Shareholders Wealth: Insight from Quantile GMM

Abstract

Corporate green finance is imperative to safeguard socio-economic practices to achieve sustainable growth. Corporate social responsibility (CSR) is considered the catalyst to create a balance in communities through sustainable business performance. In this vein, the investigation is focused on the function of green finance, which encompasses green investment for accomplishing social responsibility goals and shareholders’ wealth in the S&P 1500 firms. Panel data for 451 firms listed in the S&P 1500 index were collected over the period 2012–2023. A panel-fixed model was employed to investigate the proposed hypotheses. Moreover, endogeneity bias was addressed by the quantile-generalized method of moments (GMM). The findings of the study revealed that the green finance score positively contributes to US CSR. However, a U-shaped association was found between the green finance index and social responsibility funds allocation. In the context of shareholders, green finance has a positive impact on wealth maximization and dividend payouts. Furthermore, green finance and its associated environmental practices and green supply chain also support shareholders’ wealth maximization. The findings of the study confirm stakeholder theory, social justice theory and shareholders’ theory.