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The importance of corporate environmental reputation to investors

Khaled Hussainey (k.hussainey@bangor.ac.uk) and Aly Salama

Journal of Applied Accounting Research, 2010, vol. 11, issue 3, 229-241

Abstract: Purpose - The purpose of this paper is to explore how corporate environmental reputation (CER) affects the association between current annual stock returns and current and future annual earnings. In particular, it seeks to examine the potential usefulness of CER to investors in predicting future earnings. Design/methodology/approach - The paper uses the returns‐earnings regression model introduced by Collinset al.to examine the importance of CER for investors. It uses a sample of 889 non‐financial firms listed on the London Stock Exchange from 1996 to 2004. Findings - The paper finds that firms with higher levels of CER scores exhibit higher levels of share price anticipation of earnings than firms with lower levels of CER scores. Originality/value - This paper is the first direct evidence that CER contains value‐relevant information. Such information is potentially useful to investors in anticipating future earnings.

Keywords: Corporate social responsibility; Stock returns; Earnings; Investors; United Kingdom (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jaarpp:v:11:y:2010:i:3:p:229-241

DOI: 10.1108/09675421011088152

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Journal of Applied Accounting Research is currently edited by Associate Professor Orthodoxia Kyriacou

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