Is ESG Commitment Linked to Investment Performance in the Real Estate Sector?

Marcelo Cajias, Franz Fuerst, Pat McAllister () and Anupam Nanda ()
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Pat McAllister: School of Real Estate & Planning, Henley Business School, University of Reading
Anupam Nanda: School of Real Estate & Planning, Henley Business School, University of Reading

Real Estate & Planning Working Papers from Henley Business School, University of Reading

Abstract: The linkage between corporate commitment to environmental, social and governance (ESG) issues and investment performance has generated a substantial body of research outside the real estate sector. Nevertheless, the relationship between the environmental performance and financial performance of companies is still not well understood as studies have found mixed and contradicting results. Drawing upon the KLD database which contains ratings on seven ESG dimensions from 2003-2009, this paper investigates the relationship between the ESG rating and the financial performance of a sample of US real estate firms. Since the primary transmission channel from ESG activities to financial performance may be better reflected by a firm's intangible assets, we model both Tobin's q and the total annual return in a panel framework with time and sector specific fixed effects. Our results are largely consistent with the existing literature finding a positive relationship between CFP and CSP. Further, the time scale of the lagged effects seems plausible.

Keywords: Corporate Social Responsibility; Green Buildings; Financial Performance (search for similar items in EconPapers)
JEL-codes: C33 D21 M14 R33 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2011
New Economics Papers: this item is included in nep-bec
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Citations: View citations in EconPapers (1)

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Working Paper: Is ESG Commitment Linked to Investment Performance in the Real Estate Sector? (2011)
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