Long-term financial incentive of environmental responsibility -- socially responsible investing and firm cost of capital

We investigate the long-term financial incentives of corporate environmental responsibility by examining whether an environmentally responsible firm benefits from a lower cost of equity capital, focusing on a particular channel: sustainable and responsible investing (SRI). Using treatment effect models, we test whether investments from SRI mutual funds with environmental screening criteria impact firm cost of equity capital. We find that accounting for interaction between firm and non-shareholder stakeholders, and potential agency costs associated with certain environmentally responsible activities of the firm, SRI investing may facilitate the alignment of firm environmental and financial goals.


Issue Date:
2016
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/235994
Total Pages:
43
JEL Codes:
Q50; Q58; G23; G30
Series Statement:
AAEA
9865




 Record created 2017-04-01, last modified 2017-08-29

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