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Corporate sustainability and shareholder wealth

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  • Justyna Przychodzen
  • Wojciech Przychodzen

Abstract

The goal of this study is to provide insights in relation to implementing sustainability into corporate strategy, and provide an answer about whether it can lead to higher than average market valuation. Using extensive data of Standard & Poor's (S&P) 500 companies covering the years 2006--10, 85 companies were selected as meeting corporate sustainability criteria. An investment strategy that bought companies with corporate sustainability would have earned abnormal returns of 7.4% per year during the sample period. We find that companies 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 companies benefit from investing in corporate sustainability and that these practices are reflected in their stock prices. The results also indicate that investment in sustainable companies does not show anti-cyclical patterns within the usual stock market cycle, but it is connected with higher stock market crash resistance. The empirical evidence from this paper is particularly pronounced for public companies that consider implementing sustainability into their core business strategy. It also contributes to better understanding of this concept in the contemporary capital markets.

Suggested Citation

  • Justyna Przychodzen & Wojciech Przychodzen, 2013. "Corporate sustainability and shareholder wealth," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 56(4), pages 474-493, May.
    • Handle: RePEc:taf:jenpmg:v:56:y:2013:i:4:p:474-493
    DOI: 10.1080/09640568.2012.685927
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    Citations

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    Cited by:

    1. Iwiyisi Inua, Ofe & Anita Emeni, Ashinedu, 2019. "Corporate Governance Attributes And Social Sustainability Reporting," International Journal of Contemporary Accounting Issues-IJCAI (formerly International Journal of Accounting & Finance IJAF), The Institute of Chartered Accountants of Nigeria (ICAN), vol. 8(1), pages 21-37, June.
    2. Ayça Kubra Hizarci‐Payne & İlayda İpek & Gülüzar Kurt Gümüş, 2021. "How environmental innovation influences firm performance: A meta‐analytic review," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 1174-1190, February.
    3. Tariq, Adeel & Badir, Yuosre F. & Tariq, Waqas & Bhutta, Umair Saeed, 2017. "Drivers and consequences of green product and process innovation: A systematic review, conceptual framework, and future outlook," Technology in Society, Elsevier, vol. 51(C), pages 8-23.
    4. Julia Freybote & Lihong Qian, 2017. "Corporate real estate, stock market valuation and the reputational effects of eco-certification," Journal of Property Research, Taylor & Francis Journals, vol. 34(3), pages 163-180, July.
    5. Rajesh Kumar Bhaskaran, 2023. "Sustainability Initiatives, Knowledge-Intensive Innovators, and Firms’ Performance: An Empirical Examination," IJFS, MDPI, vol. 11(1), pages 1-16, January.
    6. Akhtar Ali & Imran Abbas Jadoon, 2022. "The Value Relevance of Corporate Sustainability Performance (CSP)," Sustainability, MDPI, vol. 14(15), pages 1-31, July.
    7. Paul Opdam & Eveliene Steingröver, 2018. "How Could Companies Engage in Sustainable Landscape Management? An Exploratory Perspective," Sustainability, MDPI, vol. 10(1), pages 1-15, January.
    8. Satirenjit Kaur Johl & Md Abu Toha, 2021. "The Nexus between Proactive Eco-Innovation and Firm Financial Performance: A Circular Economy Perspective," Sustainability, MDPI, vol. 13(11), pages 1-25, June.

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