Green investment, corporate governance and firm growth: evidence from Vietnam

Purpose This study examines whether environmental protection investment constrains or promotes sustainable firm growth in an emerging market and investigates how corporate governance mechanisms influence this relationship. Design/methodology/approach The analysis uses an unbalanced panel of Vietnamese non-financial firms during 2015–2024. Fixed-effects estimation is employed to control for unobserved heterogeneity, and robustness is assessed using alternative specifications and lagged variables. Findings Environmental protection investment is negatively associated with short-term sustainable firm growth. The evidence suggests a cost–benefit mismatch in which environmental expenditures require immediate financial resources, while their benefits emerge gradually, thereby constraining internally financed growth. Green executive cognition does not moderate the effect, indicating that managerial awareness alone is insufficient to overcome financial and institutional constraints. In contrast, green investors play a significant moderating role. Although their direct effect involves monitoring and compliance costs, their presence strengthens the positive impact of environmental investment by improving investment efficiency and reducing governance-related inefficiencies. Originality/value This study contributes to the literature by providing firm-level evidence on the conditional relationship between green investment and sustainable growth in an emerging market. It highlights the asymmetric roles of internal and external governance mechanisms and demonstrates that the growth benefits of environmental investment depend on effective external governance. The findings provide conditional support for Porter's Hypothesis and suggest that strengthening external governance through green investors is more effective than relying solely on managerial environmental awareness. These insights offer guidance for corporate managers, regulators and policymakers seeking sustainable firm growth in emerging markets.