Flammer (2013)

Flammer, Caroline. “Corporate Social Responsibility and Shareholder Reaction: the Environmental Awareness of Investors.” Academy of Management Journal, June 2013.

From the author’s abstract: “I conduct an event study around the announcement of corporate news related to environment for all US publicly traded companies from 1980 to 2009.

…I find that companies reported to behave responsibly toward the environment experience a significant stock price increase, whereas firms that behave irresponsibly face a significant decrease. Extending this view of “environment-as-a-resource,” I posit that the value of environmental CSR depends on external and internal moderators. First, I argue that external pressure to behave responsibly towards the environment―which has increased dramatically over recent decades―exacerbates the punishment for eco-harmful behavior and reduces the reward for eco-friendly initiatives. This argument is supported by the data: over time, the negative stock market reaction to eco-harmful behavior has increased, while the positive reaction to eco-friendly initiatives has decreased. Second, I argue that environmental CSR is a resource with decreasing marginal returns and insurance-like features. In keeping with this view, I find that the positive (negative) stock market reaction to eco-friendly (-harmful) events is smaller for companies with higher levels of environmental CSR.”

Link (published version):  http://sites.bu.edu/cflammer/files/2018/09/Flammer_AMJ2013.pdf