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Corporate environmental policy and abnormal stock price returns: An empirical investigation

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  • Alison Thomas

Abstract

This paper examines the correlation between the excess stock market returns and the adoption of an environmental protocol by companies. The underlying hypothesis that I test is whether evidence of the adoption of environmental policy, prosecution by an environmental agency or the routinized training of staff in environmental protocols, which proxies for the willingness of managers to invest for the long term, is associated with superior economic returns to shareholders. I find that both the adoption of an environmental policy and prosecution for breach of environment standards have significant explanatory power in an analysis of excess returns. Copyright © 2001 John Wiley & Sons, Ltd. and ERP Environment

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  • Alison Thomas, 2001. "Corporate environmental policy and abnormal stock price returns: An empirical investigation," Business Strategy and the Environment, Wiley Blackwell, vol. 10(3), pages 125-134, May.
    • Handle: RePEc:bla:bstrat:v:10:y:2001:i:3:p:125-134
    DOI: 10.1002/bse.281
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    References listed on IDEAS

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    3. Jeremy C. Stein, 1989. "Efficient Capital Markets, Inefficient Firms: A Model of Myopic Corporate Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(4), pages 655-669.
    4. Dimson, Elroy & Marsh, Paul, 1986. "Event study methodologies and the size effect : The case of UK press recommendations," Journal of Financial Economics, Elsevier, vol. 17(1), pages 113-142, September.
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