The Impact of Profitability on the Correlation between Firm Value and Eco-Efficiency in Iraqi Companies

Abstract

The present study was carried out in order to examine the effects of profitability on the relationship between eco-efficiency and firm value in Iraqi companies located in Erbil. In so doing, Ohlson’s model for testing value relevance was extended through hierarchical regression analysis. The study sample consisted of 58 construction companies located in Erbil, Iraq. Annual reports and data stream of the companies were utilized to collect the required eco-efficiency and financial data, respectively. The results of the study indicated that in order for firm value to stay positive, managers and stakeholders need to develop a suitable relationship which can be actualized by adopting environmentally friendly practices. The results also showed that there was firm value and eco-efficiency were positively correlated. It was also concluded that profitability had a positive influence on the relationship between firm value and eco-efficiency.