We review the burgeoning sustainable finance literature, emphasizing the value implications of ESG (environmental, social, and governance) and CSR (corporate social responsibility) practices. We use a discounted cash flow valuation framework to identify value drivers through which such practices can enhance firm value. Collectively, empirical evidence supports that they increase firm value by motivating employees, strengthening customer-supplier relationships, boosting long-term growth, increasing dividends, and reducing financing costs. Furthermore, more socially responsible firms deliver no higher excess stock returns in the long run. Green bonds neither provide issuers with a price premium nor make investors sacrifice on lower returns. Socially responsible investing (SRI) funds generate no higher riskadjusted long-term returns than non-SRI funds. Finally, we briefly suggest several topics for future research on sustainable finance.
Stocks with low PE ratio are perceived as having cheaper current price hence expected to generate higher return in subsequent period. This paper aimed to examine stocks with high PE Ratio followed by low stocks return and on the contrary. Using stocks which are included as member of Liquidity 45 in period 2005-2010 as samples Results showed that there is significance difference between low PE and high PE portfolio stock return in short term (holding period of six months) but there is no significance difference if they are hold for one, two, three, and four years. This research also finds that there is no significant relationship between stock return and trailing PE Ratio.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.