Impact of Corporate Ecological and Environmental Responsibility on Corporate Financial Performance: A Composite Index for Forestry Companies

ABSTRACT Due to their unique forest resources, forestry enterprises play a crucial role in dealing with climate change. They undertake a responsibility referred to as corporate ecological and environmental responsibility (CEER). This study examines whether CEER fulfillment generates economic gains for these enterprises. Drawing on 215 valid samples from China's A‐share listed forestry companies, this study develops the CEER framework based on pollution prevention, green products, and forest sustainability. It empirically examines the effect of CEER on corporate financial performance (CFP) using a fixed‐effects (FE) model and applies the instrumental variable (IV) method to address endogeneity issues. The results indicate that CEER can improve CFP; however, only pollution prevention and green product responsibilities have a significant positive impact, whereas forest sustainability responsibility does not. Additionally, compared with private enterprises, the influence of CEER on CFP is greater in state‐owned enterprises, whereas forest‐paper enterprises benefit more from CEER than forest‐board enterprises. The conclusion of this study provides a scientific basis for forestry enterprises to strengthen ecological environment management and improve the economic benefits of forest resource utilization. In addition, it provides a theoretical basis for government policies and promotes the strategy of Green China.