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Corporate real estate, stock market valuation and the reputational effects of eco-certification

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  • Julia Freybote
  • Lihong Qian

Abstract

Improving the energy efficiency of retail stores has become an important strategy for retailers. However, why do some retailers obtain Energy Star certification for their stores while others do not? We argue that retailers pursue this certification to capture reputational benefits of the Energy Star label when their stock market valuation is low. Using longitudinal data for US retailers (grocery and department stores) over the period of 2002 to 2014, we find that stock market valuation measured by Tobin’s Q explains (1) the likelihood of a retailer obtaining Energy Star certification and (2) the share of Energy Star-certified stores in a retailer’s portfolio. Operating expenses on the other hand do not appear to drive the decision to obtain Energy Star certification. Our results also suggest that the motivations of retailers to obtain LEED and Energy Star certification differ.

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  • 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.
    • Handle: RePEc:taf:jpropr:v:34:y:2017:i:3:p:163-180
    DOI: 10.1080/09599916.2017.1372508
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    Cited by:

    1. Sing, Tien Foo & Wang, Long, 2021. "Spillovers of Non-Fundamental Risks: The Tale of Two Securitized Real Estate Markets," International Real Estate Review, Global Social Science Institute, vol. 24(2), pages 185-220.

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