The Value Relevance of Reputation for Sustainability Leadership

• Type: Article in International Scientific Journal
• Date: 2014

Authors

Isabel Costa Lourenço (Author) Other; Jeffrey Lawrence Callen (Author) Other; Manuel Castelo Branco (Author) FEP; José Dias Curto (Author) Other

Journal

Title: Journal of Business Ethics

Vol. 119

Pages: 17-28

ISSN: 0167-4544

Publisher: Springer Nature

Indexing

ISI Web of Knowledge - 136 Citations

ISI Web of Science

Scopus - 164 Citations

Scientific classification

FOS: Social sciences > Economics and Business

CORDIS: Social sciences > Economics > Management studies

Other information

Authenticus ID: P-008-WCR

DOI: 10.1007/s10551-012-1617-7

Abstract (EN): This study investigates whether the market valuation of the two summary accounting measures, book value of equity and net income, is higher for firms with reputation for sustainability leadership, when compared to firms that do not enjoy such reputation. The results are interpreted through the lens of a framework combining signalling theory and resource-based theory, according to which firms signal their commitment to sustainability to influence the external perception of reputation. A firm's reputation for being committed to sustainability is an intangible resource that can increase the value of a firm's expected cash flows and/or reduce the variability of its cash flows. Our findings are according to expectations and show that the net income of firms with good sustainability reputation has a higher valuation by the market, when compared to their counterparts.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 12