Unpacking the relationship between environmental profile and financial profile; literature review toward methodological best practice.

Despite a large body of empirical studies examining the relationship between Environmental Profile (EP) and Financial Profile (FP), the results are still inconsistent. The majority of research exploring EP-FP relationships have focused on the results and overlooked the precedence of data in the process. To understand where the field currently stands, the purpose of this paper is twofold. Firstly, it offers a comprehensive definition and conceptualisation of both EP and FP as both are multidimensional constructs. Secondly, it identifies several critical issues in theorising and testing these relationships for which current practice falls short. These focus on construct clarity by highlighting the inconsistency in measuring constructs, sampling errors, different research design, and sample characteristics. This paper analyses 98 empirical studies using data as the key element in each study, and to outline what is known and unknown about the EP-FP relationship from methodological points of view. The outcomes then made related to the comparability and replicability of studies. The results indicate how methodological artefacts such as characteristics of data sources and a data sample, data quality, data collection method as well as analysis method directly influence the results. In addition, comparability and replicability of results are strongly influenced by data source and data type. Moreover, the findings of this review reveal that the main analysis trend is the impact of EP on FP, particularly examining the linear relationship between environmental performance-output-based and accounting-based variables as EP and FP measurement respectively. [ABSTRACT FROM AUTHOR]