Stock Market Reaction to Quality, Safety, and Sustainability Awards in Logistics

Abstract

A lthough quality, safety, and sustainability are important concerns in logistics, managers are sometimes reluctant to invest in these areas because it is not always clear how such investments will benefit firm performance. Empirical literature provides little guidance in the context of logistics as previous studies report mixed findings across a diverse set of industries, which may not be directly applicable to logistics. To address this gap, we conducted an event study to estimate the stock market reaction to quality, safety, and sustainability award announcements in logistics. Based on 244 award announcements during the period 2004-13, we found that stock market participants react positively to announcements of these awards. The market reaction appears to be stronger for sustainability awards than for quality and safety awards. Our results also suggest that the market reacts more favorably to quality and sustainability award announcements for firms with better past financial performance and for smaller firms.

How to Achieve Supply Chain Sustainability Efficiently? Taming the Triple Bottom Line Split Business Cycle

“…Therefore, also in another size-related dimension, the question of corporate size and absolute transport volume does not come into account with this longitudinal efficiency analysis. Derived from this, the importance of sustainability efforts in the transportation and supply chain sector is reflected by the fact that major LSP provide sustainability data and evaluations e.g., in financial report documents, supporting organizational change and driving firm value [58][59][60]. Although a variety of communication and research regarding sustainability in logistics has been published, empirical evidence for sustainability improvements is largely missing.…”

Operating Performance Effects of Service Quality and Environmental Sustainability Capabilities in Logistics

“…Empirical research on service quality and environmental sustainability indicates that the performance effects of these initiatives vary greatly across different contexts (e.g., Eroglu, Kurt & Elwakil, ; Lu & Taylor, ; Ullmann, ; Yeung, Cheng & Lai, ). In the context of logistics, Eroglu et al.…”

“…In the context of logistics, Eroglu et al. () have shown that a firm's stock price increases upon the announcement of a service quality, environmental sustainability, or safety award. In particular, firms winning service quality and environmental sustainability awards realize, on average, $78.7 and $275.4 million rise in market value, respectively.…”

“…Our focus on the longer‐term (multi‐year) effects stands in contrast to the event study approach used by Eroglu et al. (), who studied the short‐term stock market reaction to the same award announcements.…”

Do Forwarders Improve Sustainability Efficiency? Evidence from a European DEA Malmquist Index Calculation

“…Furthermore, this is also proven by the fact that all major LSP provide extensive sustainability data and reports, often within legal business report documents, for example Deutsche Post DHL [8], Kühne + Nagel [9], or A.P. Moeller Maersk [10], and research indicates that these reports drive change [11] as well as firm value [12,13]. This importance also extends towards the question of external institutional legitimation by business partners, as outlined by Busse, Kach, and Bode [14] (p. 321).…”