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CORPORATE SUSTAINABILITY AND SHAREHOLDER WEALTH
Przychodzen, Justyna Przychodzen, Wojciech
Przychodzen, Justyna
Przychodzen, Wojciech
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Abstract
The goal of this study is to provide insights on implementing sustainability into corporate strategy, and provide an answer whether it can lead to higher than average market valuation. Using extensive data of S&P 500 firms covering the years 2006-10, 85 companies were selected as meeting corporate sustainability criteria. An investment strategy that bought firms with CS would have earned abnormal returns of 7.4 percent per year during the sample period. We find that firms with balanced financial, social and environmental activities had lower revenues growth, lower growth volatility, and lower stock price volatility. These results are consistent with the idea that firms benefit from investing in corporate sustainability and that this practices are reflected in their stock prices. The results also indicate that investment in sustainable companies do not show anti-cyclical patterns within usual stock market cycle, however it is connected with higher stock market crash resistance. The empirical evidence of this paper is particularly pronounced for public firms that consider to implement sustainability into core business strategy. It also contributes to better understanding of this concept in the contemporary capital markets.
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Conference proceedings
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2012
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With permission of the license/copyright holder