Manager’s Dilemma: Stockholders’ and Consumers’ Responses to Corporate Environmental Efforts

Abstract

Abstract:This study aims to reveal that different stakeholders have different environmental preferences by demonstrating the managers' dilemma of selecting an appropriate environmental strategy to achieve firms' corporate goals. It analyzes the effects of firms' efforts in environmental impact through actual environmental practices and environmental considerations in environmental management on stockholders' and consumers' responses by using the Newsweek Green Rankings 2012 for large US-based firms. The study uses the event study methodology and the ordinary least squares multivariate regression model conditioned with relevant firm and industry-specific characteristics. The results indicate that both stockholders and consumers appreciate corporate efforts in reducing environmental damage; however, consumers exhibit a significant and negative response against firms' environmental management efforts. The conflicting results provide valuable insights into the alignment of environmental efforts for developing core competencies that lead firms toward sustainability. Further, this research makes a valuable contribution to the existing literature and provides guidelines for the formulation of public policies that encourage corporate environmental efforts to ensure simultaneous development of business and society.

The Value Relevance of Environmental, Social, and Governance Performance: The Brazilian Case

“…Moreover, prior research has primarily focused on analysing the explanatory factors of CSR practices carried out by the main companies in the country listed on the São Paulo Stock Exchange [7][8][9]. However, it is important not only to analyse the explanatory factors of CSR activities but also to analyse whether stakeholders value this information, including employees, customers, suppliers, and politicians, as well as the shareholders of the company itself [10].…”

The Effects of Managerial Competency and Local Religiosity on Corporate Environmental Responsibility

“…The literature suggests that customers reduce their price sensitivity for additional satisfaction that is derived from consuming eco-friendly products. This in turn rewards the firm for its environmental efforts [49,50]. Several studies provide evidence that firms are penalized when buyers sense environmental irresponsibility or unethical activities that solely seek profit maximization [47,48].…”