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Corporate Sustainability and Shareholder Wealth—Evidence from British Companies and Lessons from the Crisis

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  • Fernando Gómez-Bezares

    () (Deusto Business School, University of Deusto, 48014 Bilbao, Spain)

  • Wojciech Przychodzen

    () (Deusto Business School, University of Deusto, 48014 Bilbao, Spain)

  • Justyna Przychodzen

    () (Laureate Online Education, 1101 BH Amsterdam, The Netherlands)

Abstract

This study examines the impact of corporate sustainability (CS) on stock market returns for FTSE 350 companies over the period 2006–2012. We find that an investment strategy that bought shares in companies with balanced financial, social, and environmental activities would have earned an annual four-factor alpha for a value-weighted portfolio of 3.54% per year during the sample period and 2.98% above industry benchmarks. In addition, we find that CS is negatively correlated with stock return volatility, and investing in companies with CS not only generates higher returns during peak phases, but also diminishes shareholders’ losses during bear phases. We have also carried out an additional, out-of-the-sample analysis for the years 2013–2015 which confirmed our results.

Suggested Citation

  • Fernando Gómez-Bezares & Wojciech Przychodzen & Justyna Przychodzen, 2016. "Corporate Sustainability and Shareholder Wealth—Evidence from British Companies and Lessons from the Crisis," Sustainability, MDPI, Open Access Journal, vol. 8(3), pages 1-22, March.
  • Handle: RePEc:gam:jsusta:v:8:y:2016:i:3:p:276-:d:65900
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    References listed on IDEAS

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    Cited by:

    1. María Mar Miralles-Quirós & José Luis Miralles-Quirós & Luis Miguel Valente Gonçalves, 2018. "The Value Relevance of Environmental, Social, and Governance Performance: The Brazilian Case," Sustainability, MDPI, Open Access Journal, vol. 10(3), pages 1-15, February.
    2. Justyna Przychodzen & Fernando Gómez-Bezares & Wojciech Przychodzen & Mikel Larreina, 2016. "ESG Issues among Fund Managers—Factors and Motives," Sustainability, MDPI, Open Access Journal, vol. 8(10), pages 1-19, October.
    3. Guillermo Badía & Vicente Pina & Lourdes Torres, 2019. "Financial Performance of Government Bond Portfolios Based on Environmental, Social and Governance Criteria," Sustainability, MDPI, Open Access Journal, vol. 11(9), pages 1-13, April.
    4. Mollie Painter-Morland & Geert Demuijnck & Sara Ornati, 2017. "Sustainable Development and Well-Being: A Philosophical Challenge," Journal of Business Ethics, Springer, vol. 146(2), pages 295-311, December.
    5. Salvatore Loprevite & Bruno Ricca & Daniela Rupo, 2018. "Performance Sustainability and Integrated Reporting: Empirical Evidence from Mandatory and Voluntary Adoption Contexts," Sustainability, MDPI, Open Access Journal, vol. 10(5), pages 1-15, April.
    6. Joanna Lizińska & Leszek Czapiewski, 2018. "Towards Economic Corporate Sustainability in Reporting: What Does Earnings Management around Equity Offerings Mean for Long-Term Performance?," Sustainability, MDPI, Open Access Journal, vol. 10(12), pages 1-23, November.
    7. Estibaliz Goicoechea & Fernando Gómez-Bezares & José Vicente Ugarte, 2019. "Integrated Reporting Assurance: Perceptions of Auditors and Users in Spain," Sustainability, MDPI, Open Access Journal, vol. 11(3), pages 1-19, January.

    More about this item

    Keywords

    corporate financial performance; corporate sustainability; shareholder wealth; socially responsible investing; sustainable corporate finance;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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