An Empirical Examination of the Market Returns and Financial Performance of Entities Engaged in Sustainability Reporting

Jones, Stewart; Frost, Geoff; Loftus, Janice; Laan, Sandra van der

doi:10.1111/j.1835-2561.2007.tb00456.x

Cited by 106 publications

(104 citation statements)

References 29 publications

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“…Murray et al (2006) report no significant short-term associations between CSR disclosure and market valuation for a sample of U.K. firms, but they do find that over a nine-year period of time, higher levels of disclosure appear to correlate with higher market valuation. In contrast, Jones et al (2007), relying on a sample of Australian companies, find that CSR disclosure appears to be negatively, but only weakly associated with longer-term market valuation effects.…”

Section: Has the Relationship Between Csr Disclosure And Firm Value Cmentioning

confidence: 91%

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CSR disclosure: the more things change…?

Cho

Michelon

Patten

et al. 2015

Accounting, Auditing &Amp; Accountability Journal

270

224

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Purpose -CSR disclosure is receiving increased attention from the mainstream accounting research community. In general, this recently published research has failed to engage significantly with prior CSRthemed studies. The purpose of this paper is threefold. First, it examines whether more recent CSR reporting differs from that of the 1970s. Second, it investigates whether one of the major findings of prior CSR research -that disclosure appears to be largely a function of exposure to legitimacy factorscontinues to hold in more recent reporting. Third, it examines whether, as argued within the more recent CSR-themed studies, disclosure is valued by market participants.Design/methodology/approach -Using Fortune 500 data from the late 1970s (from Ernst & Ernst, 1978) and a more recent sample (2010), we identify differences in CSR disclosure by computing adequate measures in terms of disclosure breadth and comparing them for any potential changes in the influence of legitimacy factors between 1977 and 2010. In the second stage of our analysis, we use a standard valuation model to compare the association between CSR and firm value between the two time periods.Findings -We first find that the breadth of CSR disclosure increased significantly, with respect to both environmental and social information provision. Second, we find that the relationship among legitimacy factors and CSR disclosure does not differ across our two time periods. However, our analysis focusing on environmental disclosure provides evidence that industry membership is less powerfully related to differences in reporting, but only for the weighted disclosure score. Finally, our results indicate that CSR disclosure, in apparent contrast to the arguments of the more recent mainstream investigations, is not positively valued by investors.Research limitations/implications -We explore changes in CSR disclosure only for industrial firms and as such we cannot generalize findings to companies in other industries. Similarly, we focus only on companies in the United States while different relationships may hold in other countries. Further, our disclosure metrics are limited by the availability of firm-specific information provided by Ernst & Ernst. Limitations aside, however, our findings appear to suggest that the failure of the new wave of CSR research in the mainstream accounting community to acknowledge and consider prior research into social and environmental accounting is potentially troublesome. Specifically, recent CSR disclosure research published in mainstream journals often lends credence to voluntary disclosure arguments that ignore previous contradictory findings and well-established alternative explanations for observed empirical relationships.Practical implications -This paper provides supporting evidence that the unquestioned acceptance by the new wave of CSR researchers that the disclosure is about informing investors as opposed to being a tool of legitimation and image enhancement makes it less likely that such disclosure will ever mov...

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Section: Has the Relationship Between Csr Disclosure And Firm Value Cmentioning

confidence: 91%

“…Focusing more specifically on differences in firm valuation (as opposed to one-time market effects), two recent non-U.S. studies, Murray et al (2006) and Jones et al (2007), examine whether differences in social and environmental disclosure have long-term effects.…”

Section: Has the Relationship Between Csr Disclosure And Firm Value Cmentioning

confidence: 99%

CSR disclosure: the more things change…?

Cho

Michelon

Patten

et al. 2015

Accounting, Auditing &Amp; Accountability Journal

270

224

View full text Add to dashboard Cite

show abstract

“…On the other hand, Jones et al [36] report that environmental disclosure is negatively associated with longer-term market valuation. Zaho [37] notes that environmental investments appear to conflict with maximization of shareholder value.…”

Section: Corporate Social Performance and Financial Performance: The mentioning

confidence: 99%

Corporate Sustainability and Shareholder Wealth—Evidence from British Companies and Lessons from the Crisis

2016

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This study examines the impact of corporate sustainability (CS) on stock market returns for FTSE 350 companies over the period 2006-2012. We find that an investment strategy that bought shares in companies with balanced financial, social, and environmental activities would have earned an annual four-factor alpha for a value-weighted portfolio of 3.54% per year during the sample period and 2.98% above industry benchmarks. In addition, we find that CS is negatively correlated with stock return volatility, and investing in companies with CS not only generates higher returns during peak phases, but also diminishes shareholders' losses during bear phases. We have also carried out an additional, out-of-the-sample analysis for the years 2013-2015 which confirmed our results.

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“…Although some researchers have disputed the positive correlation between CRR and share prices (cf. Hassel, Nilsson & Nyquist, 2005;Jones, Frost, Loftus & Van Der Laan, 2007), the active management of and reporting on environmental, social and governance (ESG) issues is generally regarded as an imperative for investment analysts dealing with South African companies (cf. De Klerk and De Villiers, 2012;King, 2012;Solomon & Maroun, 2014).…”

Section: Corporate Social Responsibility Event Methodologies and Marmentioning

confidence: 99%

Assessing the potential impact of the Marikana incident on South African mining companies : an event method study

Hill

Maroun

2015

S. Afr. j. econ. manag. sci. (Online)

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This study examines the potential impact of industrial unrest and the outbreak of violence at Marikana on 16 August 2012 on the share prices of mining companies listed on the Johannesburg Stock Exchange (JSE) using an event methodology. Contrary to expectations, the Marikana incident does not appear to have had a widespread and prolonged effect on the South African mining sector. This may be the result of the strike action already having been discounted into the price of mining shares, implying that the market was only reacting to the unusually violent (but short-lived) protest. Alternately, the results could be indicative of investor confidence in the corporate social responsibility initiatives of the South African mining industry as a whole.This paper is the first to examine the potential impact of the Marikana incident on the share prices of mining companies listed on the JSE. It should be of interest to both academics and practitioners wanting to understand how share prices react to exogenous events. It is also relevant for corporate-governance researchers concerned with the relevance of social and governance practices in a South African setting. This research is faced with the limitations associated with most statistical research: that causality cannot be ascribed to tested relationships. Notwithstanding these limitations, it is argued that these findings are important, given the significant coverage of the Marikana incident and the ongoing debate on the need for corporate social responsibility.

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An Empirical Examination of the Market Returns and Financial Performance of Entities Engaged in Sustainability Reporting

Cited by 106 publications

References 29 publications

CSR disclosure: the more things change…?

CSR disclosure: the more things change…?

Corporate Sustainability and Shareholder Wealth—Evidence from British Companies and Lessons from the Crisis

Assessing the potential impact of the Marikana incident on South African mining companies : an event method study

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