Does it cost to be sustainable?

Jacquelyn E. Humphrey, Darren D. Lee and Yaokan Shen

Journal of Corporate Finance, 2012, vol. 18, issue 3, 626-639

Abstract: We investigate whether firms’ corporate social performance (CSP) ratings impact their performance (cost of capital) and risk. Using a proprietary CSP ratings database, we find no difference in the risk-adjusted performance of UK firms with high and low CSP ratings. Additionally, the firms do not differ in their amount of idiosyncratic risk. We find some evidence of high-ranked firms being larger. The empirical evidence therefore indicates that investors and managers are able to implement a CSP investment or business strategy without incurring any significant financial cost (or benefit) in terms of risk or return.

Keywords: Sustainability; Corporate social performance; Environmental; Social; Governance (search for similar items in EconPapers)
JEL-codes: G11 G30 Q56 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (91)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:18:y:2012:i:3:p:626-639

DOI: 10.1016/j.jcorpfin.2012.03.002

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