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Investment performance of “environmentally-friendly” firms and their initial public offers and seasoned equity offers

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  • Chan, Pak To
  • Walter, Terry

Abstract

We employ a sample of 748 environmentally-friendly (or “green”) firms listed on U.S. stock exchanges to extend studies of the effects of socially responsible investment (SRI) on stock investment returns and the performance of initial public offerings (IPOs) and seasoned equity offerings (SEOs). Our empirical tests document positive and statistically significant excess returns for our environmentally-friendly firms and their IPOs and SEOs, in contrast to our control IPO and SEO samples which underperform. In summary, a “green” equity premium is evident in returns calculated from a variety of benchmarks.

Suggested Citation

  • Chan, Pak To & Walter, Terry, 2014. "Investment performance of “environmentally-friendly” firms and their initial public offers and seasoned equity offers," Journal of Banking & Finance, Elsevier, vol. 44(C), pages 177-188.
    • Handle: RePEc:eee:jbfina:v:44:y:2014:i:c:p:177-188
    DOI: 10.1016/j.jbankfin.2014.04.006
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    More about this item

    Keywords

    Environmentally-friendly firm performance; IPOs; SEOs; Event study;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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