Is ESG Commitment Linked to Investment Performance in the Real Estate Sector?
AbstractThe linkage between corporate commitment to environmental, social and governance (ESG) issues and investment performance has generated a substantial body of research outside the real estate sector. Nevertheless, the relationship between the environmental performance and financial performance of companies is still not well understood as studies have found mixed and contradicting results. Drawing upon the KLD database which contains ratings on seven ESG dimensions from 2003-2009, this paper investigates the relationship between the ESG rating and the financial performance of a sample of US real estate firms. Since the primary transmission channel from ESG activities to financial performance may be better reflected by a firm's intangible assets, we model both Tobin's q and the total annual return in a panel framework with time and sector specific fixed effects. Our results are largely consistent with the existing literature finding a positive relationship between CFP and CSP. Further, the time scale of the lagged effects seems plausible.
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Bibliographic InfoPaper provided by Henley Business School, Reading University in its series Real Estate & Planning Working Papers with number rep-wp2011-03.
Length: 37 pages
Date of creation: 2011
Date of revision:
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More information through EDIRC
Corporate Social Responsibility; Green Buildings; Financial Performance;
Other versions of this item:
- Cajias, Marcelo & Fuerst, Franz & McAllister, Pat & Nanda, Anupam, 2011. "Is ESG Commitment Linked to Investment Performance in the Real Estate Sector?," ERES eres2011_118, European Real Estate Society (ERES).
- M14 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
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