The Tangible Benefits of Environmental and Social Considerations

Département Comptabilité-Contrôle de Gestion

Invité : Shiwon Song (INSEAD)

Salle T201

Abstract :

We investigate whether and how firms’ activities regarding Environmental and Social considerations (E&S) lead to better operating and market performance. We find that better E&S quality predicts enhanced operating performance for tangible-capital intensive firms, but not for intangible-capital intensive firms, and that such performance enhancements are driven by asset turnovers rather than profit margins. We also find that E&S’s ability to predict future stock returns of tangible-capital intensive firms disappears when controlling for future operating performance. Our findings suggest that the type of capital on which firms rely affects whether and how E&S contributes to shareholder wealth maximization.