Environmental proactivism and firm performance: evidence from security analyst earnings forecasts

Environmental proactivism and firm performance: evidence from security analyst earnings forecasts There is an ongoing debate over the impact of corporate pro‐environment actions and strategies (reflected, for example, in pollution prevention and emission reductions, product re‐design, materials stewardship) on corporate financial performance in US corporations today. A review of the existing literature in this area yields no consistent pattern of relationships between corporate environmental proactivism and financial performance when historical corporate accounting performance and stock market measures of performance are used. We revisit this relationship using a novel measure of firm performance: security analyst earnings forecasts. Specifically, we demonstrate a significant, negative relationship between environmental proactivism (using Toxic Release Inventory data) and industry analyst 1‐ and 5‐year earnings‐per‐share performance forecasts for a sample of 523 US firms in 1992. We discuss the implications of these findings and provide suggestions for future research. © 1997 John Wiley & Sons, Ltd and ERP Environment. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Business Strategy and the Environment Wiley

Environmental proactivism and firm performance: evidence from security analyst earnings forecasts

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Publisher
Wiley
Copyright
Copyright © 1997 John Wiley & Sons, Ltd and ERP Environment
ISSN
0964-4733
eISSN
1099-0836
DOI
10.1002/(SICI)1099-0836(199705)6:2<104::AID-BSE102>3.0.CO;2-T
Publisher site
See Article on Publisher Site

Abstract

There is an ongoing debate over the impact of corporate pro‐environment actions and strategies (reflected, for example, in pollution prevention and emission reductions, product re‐design, materials stewardship) on corporate financial performance in US corporations today. A review of the existing literature in this area yields no consistent pattern of relationships between corporate environmental proactivism and financial performance when historical corporate accounting performance and stock market measures of performance are used. We revisit this relationship using a novel measure of firm performance: security analyst earnings forecasts. Specifically, we demonstrate a significant, negative relationship between environmental proactivism (using Toxic Release Inventory data) and industry analyst 1‐ and 5‐year earnings‐per‐share performance forecasts for a sample of 523 US firms in 1992. We discuss the implications of these findings and provide suggestions for future research. © 1997 John Wiley & Sons, Ltd and ERP Environment.

Journal

Business Strategy and the EnvironmentWiley

Published: May 1, 1997

References

  • Strategy and the environment
    Barrett, Barrett
  • Pollution disclosures, pollution performance and economic performance
    Freedman, Freedman; Jaggi, Jaggi
  • Exploring the business benefits of environmental stewardship
    Guimaraes, Guimaraes; Liska, Liska
  • Pollution as news: Media and stock market reactions to the toxics release inventory data
    Hamilton, Hamilton
  • Cash flow signals and analysts' earnings forecast revisions
    Moses, Moses

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