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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.

Keywords: sustainable and responsible investing ; SRI ; voluntary environmental responsibility ; cost of equity capital

Subject(s): Environmental Economics and Policy

Financial Economics

Issue Date: 2016

Publication Type: Conference Paper/ Presentation

PURL Identifier: http://purl.umn.edu/235994

Total Pages: 43

JEL Codes: Q50; Q58; G23; G30

Series Statement: AAEA

9865

Record appears in: Agricultural and Applied Economics Association (AAEA) > 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts





Autor: Wang, Yanbing ; Delgado, Michael ; Xu, Jin

Fuente: http://ageconsearch.umn.edu/record/235994?ln=en







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