The Value Relevance of Corporate Sustainability Performance (CSP)

Akhtar Ali and Imran Abbas Jadoon
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Akhtar Ali: Department of Management Sciences, COMSATS University Islamabad, Islamabad 45550, Pakistan
Imran Abbas Jadoon: Department of Management Sciences, COMSATS University Islamabad, Islamabad 45550, Pakistan

Sustainability, 2022, vol. 14, issue 15, 1-31

Abstract: There are two opposite views about corporate sustainability in the existing literature. Sustainability activities are considered as a source of long-term value creation for the shareholders’ interest whereas they also occupy scarce corporate resources and become an extra burden at the expense of shareholders. To examine these contradictory views, this study investigated the value relevance of CSP using a sample of 113 firms belonging to twelve (12) highly sustainable economies as ranked by the Global Sustainability Competiveness Index for the period 2015–2020. The CSP was measured through a Sustainability Index (SI) developed in this study using the GRI framework which takes into account all the three dimensions of sustainability, i.e., economic, environmental, and social. The results of the study showed that CSP significantly explains the variation in stock market prices and hence is value relevant in supporting the shareholders’ value-enhancing role of corporate sustainability. The results are useful for practitioners and policy makers in the field of corporate sustainability.

Keywords: corporate sustainability performance; value relevance; GRI framework (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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