Long-term financial incentive of environmental responsibility -- socially responsible investing and firm cost of capital
Wang, Yanbing ; Delgado, Michael S. ; Xu, Jin
AgEcon Search - St. Paul
2016
43 p.
conference paper ; corporate social responsibility ; environment ; sustainable development
Business economics
English
Bibliogr.
"We investigate the long-term financial incentives of corporate environmental responsibility by examining whether an environmentally responsible firm benefits from a lower cost of equity capital, focusing on a particular channel: sustainable and responsible investing (SRI). Using treatment effect models, we test whether investments from SRI mutual funds with environmental screening criteria impact firm cost of equity capital. We find that accounting for interaction between firm and non-shareholder stakeholders, and potential agency costs associated with certain environmentally responsible activities of the firm, SRI investing may facilitate the alignment of firm environmental and financial goals."
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