An Empirical Investigation of Environmental Performance and the Market Value of the Firm

Jacobs, Brian; Singhal, Vinod R.; Subramanian, Ravi

doi:10.2139/ssrn.1320721

Cited by 175 publications

(302 citation statements)

References 50 publications

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“…Inconsistent results address the association between CESP and financial performance (Graves & Waddock, 1999), such that studies report weak positive (Preston, 1978), neutral (Orliztky & Benjamin, 2001), or even negative (Patten, 2002) associations. Similar relationship patterns emerge from assessments of environmental performance, in that previous findings report positive (Al-Najjar & Anfimiadou, 2012;King & Lenox, 2002;Nakao, Amano, Matsumura, Genba & Nakano, 2007), quasi-neutral (Jacobs, Singhal, & Subramanian, 2010), and negative (Filbeck & Gorman, 2004;Hassel et al, 2005) links. Other studies indicate that causality might run both ways, such that strong financial performance facilitates the firm's engagement in CESP (Waddock & Graves, 1997) or environmental performance (Nakao et al, 2007), which in turn might reinforce positive financial performance (AlNajjar & Anfimiadou, 2012;French, Schwert & Stambaugh, 1987;Margolis et al, 2007;Nakao et al, 2007;Orlitzky et al, 2003;Waddock & Graves, 1997).…”

Section: Introductionsupporting

confidence: 68%

Risk and return characteristics of environmentally and socially responsible firms in Spain during a financial downturn: 2008–2011

Ruíz-Palomino

Rubio

Martínez-Cañas

2015

SAJBM

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The onset of the global financial crisis in 2008 undermined trust in financial markets, with immediate damages to businesses and enduring negative effects for numerous national economies. The situation also has endangered progress in terms of investments in environmental and social management (ESM) issues, because managers may be more likely to embrace the misguided notion that such investments represent a non-returnable costs that will hinder firms' financial performance. Yet ESM is needed now more than ever, because "doing good and doing well" messages are highly appreciated by stakeholders and can substantially improve a firm's competitiveness. This article analyzes the performance of the Spanish FTSE4Good IBEX index, compared with that of the Spanish IBEX 35 index, during the financial crisis and reveals slightly better performance for the former. Thus, considering the difficult financial context, indicators of good environmental and social performance, among other factors, might have positive effects on stock index performance. The findings offer some key implications for managerial practice.

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Section: Introductionsupporting

confidence: 68%

Risk and return characteristics of environmentally and socially responsible firms in Spain during a financial downturn: 2008–2011

Ruíz-Palomino

Rubio

Martínez-Cañas

2015

SAJBM

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“…There seems to be a necessity to incorporate a proper combination of different types of activities, instead of simply maximizing the intensity of any existing environmental protection per se [39][40][41].…”

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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“…For example, research suggests that stakeholder pressure, attainment of green certifications (such as ISO 14001), and adoption of environmental management system (EMS) are some of the principal drivers that improve firms' quests to improve sustainability (Marcus and Fremeth 2009;Jabbour et al 2013;Yang, Lin, Chan, and Sheu 2010). Such drivers not only facilitate firms' abilities to meet environmental targets but also positively influence their financial performance (Jacobs, Singhal and Subramanian 2010). However, a majority of firms still consider environmental initiatives as a burden on their profit potentials and adopt short-term compliance strategies to meet targets set by the regulatory authorities (Marcus and Fremeth 2009).…”

Section: Introductionmentioning

confidence: 99%

Green competence framework: evidence from China

Subramanian

Abdulrahman

et al. 2015

The International Journal of Human Resource Management

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Recently Human Resources Management (HRM) functions such as recruitment, selection, training and performance evaluation are expected in considering environmental management (EM) issues. Environmental protective acts with adequate ecological knowledge and socioeconomic behavior and skills are referred to in this paper as green competencies. However, a systematic approach for developing and understanding key factors that enhance individuals' green competencies is lacking. This study contributes to green human resource literature by integrating environmental consumer behavior literature with traditional skills and competencies literature to help firms to select the right individuals to achieve their environmental goals. Using Robert's competencies framework and structural equation modeling (SEM), this paper empirically examines the influence of individual green competencies on organizations' green practices and performance objectives. Our model is tested using a sample of 1,230 employees working in key industries in the Chinese coastal city of Ningbo. The results indicate that acquired green competencies are more positively associated with individuals' green competencies and green behavior. The study empirically demonstrates that verifying acquired green competence attributes such as environmental knowledge, green purchase attitude and intention during employee selection would certainly be helpful for firms to identify individual green performance potential.

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An Empirical Investigation of Environmental Performance and the Market Value of the Firm

Cited by 175 publications

References 50 publications

Risk and return characteristics of environmentally and socially responsible firms in Spain during a financial downturn: 2008–2011

Risk and return characteristics of environmentally and socially responsible firms in Spain during a financial downturn: 2008–2011

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

Green competence framework: evidence from China

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