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Does Ethics Reward on Public Markets: Empirical Evidences Ten Years After the Great Recession

Author

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  • Catello Giovanni Landi
  • Valerio Rapone
  • Danilo Tuccillo
  • Andrea Rey

Abstract

In the aftermath of the last Great Recession in 2007, firms¡¯ commitment to social responsibility and sustainability started to be considered a corporate leverage to make extra-returns as well as to improve corporate reputation on institutional markets. This in turn has implied a lower uncertainty among investors and a higher trust from stakeholders¡¯ categories, rising virtuous firms¡¯ returns to over-perform their less responsible peers. Hence, this paper investigates the positive externalities of CSR on Italian stock exchange market, focusing on Blue Chips¡¯ financial performance over the ten years post-crisis. In particular, we examined whether a listed company has been rewarded by its stakeholders over a high volatility periods, leveraging on CSR and Sustainability issues. Empirical findings highlight, ceteris paribus, two implications in regards to the impact of sustainability rating on corporate financial health. Indeed, the effect of CSR and corporate sustainability improves significantly companies¡¯ earning performance (Return on Asset), although firms do not benefit from economic outperformances (Earning per Share) on stock exchange market.

Suggested Citation

  • Catello Giovanni Landi & Valerio Rapone & Danilo Tuccillo & Andrea Rey, 2019. "Does Ethics Reward on Public Markets: Empirical Evidences Ten Years After the Great Recession," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 10(3), pages 1-12, May.
    • Handle: RePEc:jfr:ijba11:v:10:y:2019:i:3:p:1-12
    DOI: 10.5430/ijba.v10n3p1
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    References listed on IDEAS

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    2. repec:eme:mfppss:03074359910765830 is not listed on IDEAS
    3. Abagail McWilliams & Donald Siegel, 2000. "Corporate social responsibility and financial performance: correlation or misspecification?," Strategic Management Journal, Wiley Blackwell, vol. 21(5), pages 603-609, May.
    4. David A. Sauer, 1997. "The impact of social‐responsibility screens on investment performance: Evidence from the Domini 400 social index and Domini Equity Mutual Fund," Review of Financial Economics, John Wiley & Sons, vol. 6(2), pages 137-149.
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