Is There Value Creation in the Banks Listed in the Dow Jones Sustainability Index Europe?

Abstract

The banking sector since 2001 has seen an increasing evolution in the number of banks that engage in sustainability in Europe, however, this evolution has been slower when compared to the other sectors of activity. It should be noted that the number of empirical studies in this particular sector in this region covering a specific period of study, which includes the global financial crisis, is scarce. In this sense, the present study evaluates the value relevance of banks listed in the Dow Jones Sustainability Index Europe using a sample of 66 European banks in the stock markets of France, Germany, Italy, the Netherlands, Norway, Spain and the United Kingdom. From 2001 to 2013, the period under review presented a major growth in sustainable investments, by considering the global financial crisis, it was studied in two subperiods, pre and post crisis. Therefore, by using a modified Ohlson model and applying a panel data methodology for the empirical research, consisting of a combination of time series and cross-sectional data in a joint test, it enabled to control individual unobservable heterogeneity as well as the endogenous nature of the explanatory variables. The study found that banks listed in this index are associated with higher market valuations and has a direct effect on stock prices by modifying the value-relevance of financial information. The global financial crisis has led investors to pay attention to sustainability in the banking sector in the European markets and began to include ethical principles in their investment strategies. These findings have important information for both investors and stakeholders, as well as market regulators and policymakers. The present empirical study contributes to the existing literature and encourages investors to play an important role in the sustainable development of such an important sector of society.

The Impact of Social Responsibility Performance on the Value Relevance of Financial Data in the Banking Sector: Evidence from Poland

“…By employing multivariate regression analysis based on the Ohlson [53,54] valuation model and the Chow test for structural breaks, the study attempts to compare the value relevance of book values of equity and net earnings in banks included in the CSR indices of WSE (Respect Index and WIG-ESG) with that of other publicly traded banks in the Polish banking sector. Consistent with the results of studies conducted in other settings, e.g., [45][46][47][48][49]52,[55][56][57] the results suggest that banks with better CSP exhibit markedly higher value relevance of financial data than their less socially responsible counterparts. Additionally, in line with several prior investigations conducted in developed markets [45,47,49,51,52], more responsible banks listed on WSE demonstrate higher (lower) sensitivity of market values to net earnings (book values of equity).…”

“…Consistent with the results of studies conducted in other settings, e.g., [45][46][47][48][49]52,[55][56][57] the results suggest that banks with better CSP exhibit markedly higher value relevance of financial data than their less socially responsible counterparts. Additionally, in line with several prior investigations conducted in developed markets [45,47,49,51,52], more responsible banks listed on WSE demonstrate higher (lower) sensitivity of market values to net earnings (book values of equity).…”

“…Direct empirical evidence on the relationship between social and financial performance of banks, and in particular on the impact of CSP on their market values and perception of the disclosed financial information by the equity investors is relatively limited and mixed [26][27][28][29][30][31][32][33][34][35][36][37][38][39][40][41][42][43][44]. Moreover, to date only a few studies in the relevant international literature have investigated the impact of CSP on the value relevance of accounting data in a cross section of industries [45][46][47][48][49] or the specific context of the banking sector [50][51][52].…”

Kurumsal Sosyal Performansa Piyasa Tepkisi: BIST Örneği

“…(2012), KSP düzeyi ile piyasa değeri arasında güçlü bir ilişki tespit etmiş ve endekste yer almayan büyük ve karlı firmalara piyasanın olumsuz tepki verdiğini ortaya koymuştur. Benzer şekilde Dow Jones Sürdürülebilirlik Endeksi'ne üyeliği, KSP için temsili değişken olarak kullanan Arraiano (2020), endekste yer alan Avrupa bankalarının daha yüksek piyasa değerlerine sahip olduklarını tespit etmiştir. Yine Avrupa banka sektörünü ele alan bir başka çalışma, KSP'yi Thomson Reuters veritabanından elde ettikleri performans skorları ile ölçmüş ve KSP'yi oluşturan alt boyutlar için birbirinden farklı sonuçlara ulaşmıştır.…”

“…Şirketlerin KSP düzeyleri ile finansal performansları arasındaki ilişkiyi araştıran literatürde mevcut diğer çalışmalarda birbirinden farklı sonuçlar elde edildiğinden bu çalışmada ulaşılan pozitif yönlü ilişkiye dair bulguların, bazı çalışmalar ile uyumlu olduğunu (Arraiano, 2020;Kim vd., 2018;Jha ve Rangarajan, 2020) bazıları ile ise uyumsuz olduğunu (Bussoli vd., 2019;Landi ve Sciarelli, 2019;Gürünlü, 2019;Tanç, 2019)…”