A new movement reconciling corporate sustainability and investment is gaining world-wide attention. Whether corporate sustainability has an impact on market value is examined using large US non-financial firms from 1999 to 2002 in this paper. Taking Tobin's "q" as the proxy for firm value, a significantly positive relation between corporate sustainability and its market value is found. We also find a strong interaction effect between corporate sustainability and sales growth on firm value. Moreover, there is evidence to support that being sustainable causes a firm to increase its value. This indicates that companies with remarkable sustainable development strategies are more likely to be rewarded by investors with a higher valuation in the financial markets. Copyright (c) 2007 The Authors; Journal compilation (c) 2007 Blackwell Publishing Ltd.
Corporate sustainability is defi ned as the integration of fi nancial benefi t, environmental protection, and social responsibility into business operations and management. However, there is little evidence depicting the relationship between corporate sustainability and operating performance, and it is also doubtful whether investors in the stock market value corporate sustainable strategies. This study therefore seeks to evaluate the performance of sustainable fi rms through the perspectives of exploring realistic issues as well as providing supporting evidence. A two-stage performance evaluation is adopted to evaluate the sustainable fi rms' profi tability and marketability effi ciency in comparison with other fi rms.bias of corporate sustainability toward environmental policies, there is suffi cient interest in integrating social and economic aspects into corporate sustainability. Corporate sustainability is generally defi ned as a business approach that creates long-term shareholder value by embracing opportunities and managing risk from three dimensions, namely, economic, environmental, and social (offi cially defi ned by the Dow Jones sustainability indexes). A sustainable company is one whose characteristics and actions are designed to lead to a 'sustainable future state'.This paper extends prior studies and contributes in the following ways. From a theoretical perspective, we bring together the concepts of corporate sustainability and business performance. From an empirical perspective, we use a two-stage performance evaluation model covering a fi rm's profi tability and marketability effi ciency which in turn refl ect the business value creation process. The remainder of this paper is organized as follows. The next section introduces the relevant theories on corporate sustainability, and also discusses the linkage between corporate sustainability and performance. The third section describes the sample selection, methodology, and variables used in this study. The empirical results are discussed in the fourth section. The main conclusions of this paper are summarized in the last section.
Literature ReviewThis section contains three aspects of the relevant literature, namely, the defi nition of corporate sustainability, the relationship between corporate sustainability and performance, and the two-stage performance evaluation model. Each of these is reviewed to provide a theoretical background to this study.
The aim of this paper is to explore the efficiency and the benchmarks of financial holding companies (FHCs) for a small open economy, Taiwan. We employ a two-stage production process including profitability and marketability performance using a non-parametric frontier method — data envelopment analysis (DEA). Furthermore, the factor-specific measure and BCC (Banker–Charnes–Cooper) model are combined together not only to identify the inputs/outputs that are most important but also to distinguish those FHCs which can be treated as benchmarks. Our empirical result shows that (1) big-sized FHCs are generally more efficient than small-sized ones; (2) FHCs with the main body of insurance averagely perform better than the other two types (banks and securities); (3) while small efficient FHCs are easily to become benchmarks, big efficient FHCs are deemed as competitive niche players; (4) further mergers and acquisitions among FHCs should be considered so as to achieve economies of scale. The profitability/marketability matrix of FHCs is also presented.
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