Investigating the long-term economic consequences of corporate environmental responsibility: evidence from polluting listed companies in the Tehran stock exchange

The purpose of this study is to investigate the long-term economic effects of corporate environmental responsibility of polluting companies from the perspective of earnings persistence and investors' response. To achieve the research objectives, 156 companies listed in the Tehran stock-exchange during 2014-2019 were selected and using the panel data approach, research hypotheses were tested. The results indicate that of all the studied companies have earnings persistence, but the corporate environmental responsibility of the polluting companies does not have a significant effect on the earnings persistence. Also, the profits of polluting companies have a direct impact on the reaction of investors. Investors, however, do not show a significant reaction to the disclosure of the environmental responsibility of the polluting companies. Findings of this study can help managers in rationally managing the tension between environmental investment in relation to shareholders and the quality of profitability. The findings also have important implications for environmental activists, policy makers and regulatory bodies.