Corporate social performance and portfolio management

Abstract

Purpose – The purpose of this paper is to assess the existence of a relationship between socially responsible behavior of companies and price trends of their stocks. Design/methodology/approach – The analysis is conducted by empirically testing data of environmental, social and governance ratings of a sample of European firms between December 2005 and December 2010. A disaggregate analysis is also performed to infer whether a specific contribution of all the different factors that make a business socially responsible can be observed in the value generation process. Findings – The results show that the application of a sustainable approach are successful in creating value, both to the investor and the issuer companies. Research limitations/implications – Findings of this work are significant with respect to portfolio management, because they suggest, on one hand, the myopia of a short-term approach (short-termism), and on the other hand, the importance of sustainable investing. Originality/value – This paper focusses on the integration that has led many international groups to explicitly include extra-financial risk factors in their decision-making processes, by applying the by the four-factor model on a brand new data set.

Analysis of corporate sustainability performance and corporate financial performance causal linkage in the Indian context

“…However, for Bajic and Yurtoglu (2018), the analysis of individual scores revealed that only the social aspect of CSP was able to influence CFP with no significant impact for the environment and governance aspects. Teti et al (2015) conducted a similar analysis for CSP measured by ESG ratings and CFP in terms of stock returns where the findings suggested that at an aggregate level, firms with higher sustainability scores had higher performance over the study period, whereas at the disaggregated level, firms with higher Escores also contributed to higher firm value. The reverse causal analysis strengthened with the GC test for CSP-CFP relationship also couldn't establish that Indian firms with higher CFP lead to more CSP at an aggregate or individual level.…”

Assessing the effects of socially responsible strategic partnerships on building brand equity of integrated business structures in Ukraine

“…Customer loyalty can be enhanced through appropriate investment in corporate social responsibility (see Wartick, 2002, pp. 371-392;Teti et al 2015Teti et al , pp. 1144Teti et al -1160.…”

The Drivers of Green Investment: A Bibliometric and Systematic Review

“…There is a strong relationship between financial returns and sustainability, explained by the level of performance for all the metrics analyzed (Carhart's alpha, Sharpe, net return, reduced cost). Ghosh, Sarmah, and Kanauzia (2020) [24]; Li et al (2020) [82] Duran-Santomil et al (2019) [92]; Kim and Lee (2018) [86]; Ganda and Milondzo (2018) [23]; Teti et al (2015) [70]; Yadav, Han, and Rho (2015) [69] With responsible management and strategy, the firms can use tools to optimize their performance, improving sustainability while not necessarily sacrificing financial outcomes and making the company more profitable and more likely to survive in the long run.…”

“…Ajour El Zein, Consolacion-Segura, and Huertas-Garcia (2020) [94]; Han et al (2020) [1]; Awan et al (2020) [90]; Yadav, Han and Rho (2015) [69]; Teti et al (2015) [70] Efficiency gains Sustainability has been an important issue for several decades because companies want to secure competitive advantages for their future such as cost savings, consumer demand, risk mitigation, tax incentives, and using resources efficiently in saturated or competitive markets. Han et al (2020) [1]; Karlsson (2019) [78]; Kim and Lee (2018) [86] The cooperation mode of value co-creation can guide the partners to invest in green technology and distribute benefits.…”

“…Consequently, in the long-term, these manufacturers obtain economic advantages such as increased corporate income and profits, superior financial and economic performance, and "financial value creation, expressed in terms of medium-and long-term stock returns" [35]. Moreover, companies that invest more resources and have the necessary capabilities to manage the impact of their activity on the environment but also comply with all environmental rules and regulations, obviously create a reputation and a considerably higher financial value in the medium and long-term [70]. Thus, companies that implement green investments fulfill their goal of obtaining a higher return on investment [1].…”