Manager’s Dilemma: Stockholders’ and Consumers’ Responses to Corporate Environmental Efforts

Prayag Lal Yadav, Seung Hun Han and Hohyun Kim
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Prayag Lal Yadav: Korea Advanced Institute of Science and Technlogy, Global Information and Telecommunication Technology Program, Munji-ro, Yuseong-gu, Daejeon 34051, Korea
Seung Hun Han: Korea Advanced Institute of Science and Technology, College of Business, School of Business and Technology Management, Daehak-ro, Yuseong-gu, Daejeon 34141, Korea
Hohyun Kim: Korea Advanced Institute of Science and Technology, College of Business, School of Business and Technology Management, Daehak-ro, Yuseong-gu, Daejeon 34141, Korea

Sustainability, 2017, vol. 9, issue 7, 1-14

Abstract: This study aims to reveal that different stakeholders have different environmental preferences by demonstrating the managers’ dilemma of selecting an appropriate environmental strategy to achieve firms’ corporate goals. It analyzes the effects of firms’ efforts in environmental impact through actual environmental practices and environmental considerations in environmental management on stockholders’ and consumers’ responses by using the Newsweek Green Rankings 2012 for large US-based firms. The study uses the event study methodology and the ordinary least squares multivariate regression model conditioned with relevant firm and industry-specific characteristics. The results indicate that both stockholders and consumers appreciate corporate efforts in reducing environmental damage; however, consumers exhibit a significant and negative response against firms’ environmental management efforts. The conflicting results provide valuable insights into the alignment of environmental efforts for developing core competencies that lead firms toward sustainability. Further, this research makes a valuable contribution to the existing literature and provides guidelines for the formulation of public policies that encourage corporate environmental efforts to ensure simultaneous development of business and society.

Keywords: corporate environmental performance; creating shared value; stakeholder; sustainable development; stockholder expectation; consumer response (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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