Firm Characteristics, Industry Context, and Investor Reactions to Environmental CSR: A Stakeholder Theory Approach

Journal of Business Ethics 130 (4):833-849 (2015)
  Copy   BIBTEX

Abstract

We use an event study to capture the investor reaction to the first Newsweek Green Rankings in September 2009, a notable, multi-dimensional recent development in the rating of corporate environmental CSR performance. Drawing on stakeholder theory, we develop hypotheses about market investor reaction to the disclosure of new, relevant corporate environmental performance in both the short and longer term, whether market investors’ reaction reflects industry context, and whether firm-level contextual variables representing firm size, and market legitimacy significantly impacts the investor reaction. We find that, for the sample of the largest 500 US firms ranked by Newsweek, investors react positively both to the raw and within-industry rankings of green performance in terms of both short-term and longer-term returns. Moreover, the investor reaction is significantly influenced by contextual variables such as firm size and firm market legitimacy. Our results are compatible with the inference that rating agencies like Newsweek serve a valuable information dissemination function such that investors in better ranked firms anticipate larger future cash flows due to more positive reactions from key stakeholders such as environmentally-conscious customers, employees, NGOs, regulators, and thus reward these firms with stock price increases. Finally, larger, more visible firms benefit more, while firms which have more market legitimacy benefit less. We believe these findings will be of considerable interest to scholars of environmental corporate social responsibility.

Links

PhilArchive



    Upload a copy of this work     Papers currently archived: 90,616

External links

Setup an account with your affiliations in order to access resources via your University's proxy server

Through your library

Similar books and articles

The Stakeholder Theory of the Firm.Steven N. Brenner - 1992 - Business Ethics Quarterly 2 (2):99-119.
A “Black Box” of Stakeholder Thinking.Kalle Pajunen - 2010 - Journal of Business Ethics 96 (S1):27-32.
Stakeholder Management Theory, Firm Strategy, and Ambidexterity.Mario Minoja - 2012 - Journal of Business Ethics 109 (1):67-82.
Decentered Stakeholder Theory: Toward a Research Agenda.Dominic Kaeslin, Ruth Schmitt & Jerry Calton - 2007 - Proceedings of the International Association for Business and Society 18:448-452.
Economic contracts versus social relationships as a foundation for normative stakeholder theory.John Hendry - 2001 - Business Ethics, the Environment and Responsibility 10 (3):223–232.
The Ethical and Environmental Limits of Stakeholder Theory.Alan Strudler - 2002 - Business Ethics Quarterly 12 (2):215-233.
Institutional Entrepreneurs as Political Actors.Mika Skippari & Kalle Pajunen - 2008 - Proceedings of the International Association for Business and Society 19:410-420.
A Map Leading to Less Waste.David Saiia & Vananh Le - 2009 - Proceedings of the International Association for Business and Society 20:302-313.
The stakeholder theory and the common good.Antonio Argandoña - 1998 - Journal of Business Ethics 17 (9-10):1093-1102.
Structure and Agency in Firm-Stakeholder Networks.Dominic Kaeslin - 2007 - Proceedings of the International Association for Business and Society 18:443-447.

Analytics

Added to PP
2015-09-03

Downloads
35 (#396,067)

6 months
2 (#670,035)

Historical graph of downloads
How can I increase my downloads?

Author's Profile

James Cordeiro
Oxford University