Does The Market Value Environmental Performance?Shameek Konar and Mark A. Cohen () The Review of Economics and Statistics, 2001, vol. 83, issue 2, pages 281-289 Abstract: Previous studies that attempt to relate environmental to financial performance have often led to conflicting results due to small samples and subjective environmental performance criteria. We report on a study that relates the market value of firms in the S&P 500 to objective measures of their environmental performance. After controlling for variables traditionally thought to explain firm-level financial performance, we find that bad environmental performance is negatively correlated with the intangible asset value of firms. The average "intangible liability" for firms in our sample is $380 million - approximately 9% of the replacement value of tangible assets. We conclude that legally emitted toxic chemicals have a significant effect on the intangible asset value of publicly traded companies. A 10% reduction in emissions of toxic chemicals results in a $34 million increase in market value. The magnitude of these effects varies across industries, with larger losses accruing to the traditionally polluting industries. © 2001 by the President and Fellows of Harvard College and the Massachusetts Institute of Technolog Date: 2001 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:tpr:restat:v:83:y:2001:i:2:p:281-289 Ordering information: This journal article can be ordered from Access Statistics for this article The Review of Economics and Statistics is edited by Daron Acemoglu, George J. Borjas, Dani Rodrik and Julio J. Rotemberg More articles in The Review of Economics and Statistics from MIT Press |
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