Abstract
This paper examines the stock market reaction to company investment
decisions with a sustainability objective. We estimate abnormal returns for a
sample of 517 investment announcements for listed UK firms for the 2013 to
2021 period. From these we classify 90 announcements as having a sustainable
objective. Announcements with a sustainable objective are positively received
by market participants. We also examine the relationship between abnormal
returns and the ESG credentials of the announcing company. We find that ESG
credentials are negatively associated with abnormal returns. However, the stock
market positively rewards firms with a record of weaker ESG engagement. If the
market is allocatively efficient, sustainable investment is encouraged and will
attract funding. In addition, our fundings confirm sustainable investments
should be undertaken not only for philanthropic motives but also for fiduciary
and pecuniary reasons.
decisions with a sustainability objective. We estimate abnormal returns for a
sample of 517 investment announcements for listed UK firms for the 2013 to
2021 period. From these we classify 90 announcements as having a sustainable
objective. Announcements with a sustainable objective are positively received
by market participants. We also examine the relationship between abnormal
returns and the ESG credentials of the announcing company. We find that ESG
credentials are negatively associated with abnormal returns. However, the stock
market positively rewards firms with a record of weaker ESG engagement. If the
market is allocatively efficient, sustainable investment is encouraged and will
attract funding. In addition, our fundings confirm sustainable investments
should be undertaken not only for philanthropic motives but also for fiduciary
and pecuniary reasons.
| Original language | English |
|---|---|
| Publication status | Published - 2 Jul 2023 |
| Event | 29th Annual Conference of Multinational Finance Society 2023 - Paphos, Cyprus Duration: 2 Jul 2023 → 5 Jul 2023 https://www.mfsociety.org/page.php?pageID=410# |
Conference
| Conference | 29th Annual Conference of Multinational Finance Society 2023 |
|---|---|
| Abbreviated title | MFS 2023 |
| Country/Territory | Cyprus |
| City | Paphos |
| Period | 2/07/23 → 5/07/23 |
| Internet address |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
-
SDG 8 Decent Work and Economic Growth -
SDG 9 Industry, Innovation, and Infrastructure -
SDG 13 Climate Action
Keywords
- Company Investment Decisions
- Sustainable Investments
- Event Study
- Market valuation
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