Does Community and Environmental Responsibility Affect Firm Risk?: Evidence from UK Panel Data, 1994-2006

Steve Toms; Keith Philip Anderson; Aly Salama

doi:10.1111/j.1467-8608.2011.01617.x

Does Community and Environmental Responsibility Affect Firm Risk? Evidence from UK Panel Data, 1994-2006

Steve Toms, Keith Philip Anderson, Aly Salama

Management

Research output: Contribution to journal › Article › peer-review

Abstract

The question of how an individual firm's social and environmental performance impacts its firm risk has not been examined in any empirical UK research. Does a company that strives to attain good environmental performance decrease its market risk or is environmental performance just a disadvantageous cost that increases such risk levels for these firms? Answers to this question have important implications for the management of companies and the investment decisions of individuals and institutions. The purpose of this paper is to examine the relationship between corporate environmental performance and firm risk in the British context. Using the largest dataset assembled so far, with community and environmental responsibility (CER) rankings for all rated UK companies between 1994 and 2006, we show that a company's environmental performance is inversely related to its systematic financial risk. However, an increase of 1.0 in the CER score is associated with only a 0.028 reduction in its ß.

Original language	English
Pages (from-to)	192–204
Number of pages	12
Journal	Business Ethics
Volume	20
Issue number	2
DOIs	https://doi.org/10.1111/j.1467-8608.2011.01617.x
Publication status	Published - Apr 2010

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10.1111/j.1467-8608.2011.01617.x

http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8608.2011.01617.x/abstract

Cite this

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title = "Does Community and Environmental Responsibility Affect Firm Risk?: Evidence from UK Panel Data, 1994-2006",

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