XML FeedsVoluntary Corporate Environmental Initiatives and Shareholder Wealth
By damageva on Jul 5, 2008 | In General, Companies,CSR,Business,Finance, Academic Study/Journal Article, Research Institute NGO NonProfit, Costs and Benefits, Free Report at Time of Entry | Send feedback »
Link: http://www.cepr.org/pubs/dps/DP6698.asp.asp
Abstract: Researchers debate whether environmental investments reduce firm value or can actually improve financial performance. Karen Fisher-Vanden and Karin S Thorburn provide some first evidence on shareholder wealth effects of voluntary corporate environmental initiatives. Companies announcing membership in Climate Leaders and Ceres - two voluntary environmental programs related to climate change - experience significantly negative abnormal stock returns. The price decline is smaller in carbon-intensive industries, where regulatory actions are more likely, and for high book-to-market firms, suggesting that "green" expenditures crowd out growth-related investments. The authors also document insignificant announcement returns for portfolios of industry rivals. Overall, the environmental investments appear to conflict with shareholder value-maximization. This has far reaching implications since the U.S. government relies on voluntary initiatives to reduce the emissions of greenhouse gases.
Keywords: capital expenditures, climate change, corporate social responsibility, environmentally responsible investing, shareholder wealth
by Karen Fisher-Vanden and Karin S Thorburn
Center for Economic Policy Research www.cepr.org
53-56 Great Sutton Street, London EC1V 0DG; United Kingdom; Tel: +44 (0)20 7183 8801 Fax: +44 (0)20 7183 8820; Email: cepr@cepr.org
Discussion Paper DP6698; February, 2008
http://www.cepr.org/pubs/dps/DP6698.asp.asp
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