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The Effect of Environmental, Social, Governance and Sustainability Initiatives on Stock Value – Examining Market Response to Initiatives Undertaken by Listed Companies

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  • Kar Yee Lo
  • Calvin Lee Kwan

Abstract

This paper examines the impact of environmental, social, governance (ESG) and sustainability initiatives on stock value of listed companies in Hong Kong. Event methodology is used to examine whether the market responses significantly to the implementation of these initiatives. Our result shows that the market reacts more positively to ESG initiatives than sustainability initiatives. This brings several implications to corporates' strategy as well as development of socially responsible investments (SRI). To facilitate the development of SRI, companies should communicate the value and returns of these initiatives clearly with investors; financial institutions should also equip investors with knowledge to understand non‐financial information. Enhancing the transparency of sustainability index will also give investors more credible information to relate firms' CSR performance with firm value. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

Suggested Citation

  • Kar Yee Lo & Calvin Lee Kwan, 2017. "The Effect of Environmental, Social, Governance and Sustainability Initiatives on Stock Value – Examining Market Response to Initiatives Undertaken by Listed Companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 24(6), pages 606-619, November.
    • Handle: RePEc:wly:corsem:v:24:y:2017:i:6:p:606-619
    DOI: 10.1002/csr.1431
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