Scientific journal paper Q1
The value relevance of reputation for sustainability leadership
Isabel Lourenço (Lourenço, I. C.); Jeffrey Lawrence Callen (Callen, J. L.); Manuel Castelo Branco (Branco, M. C.); José Curto (Curto, J.);
Journal Title
Journal of Business Ethics
Year (definitive publication)
2014
Language
English
Country
Netherlands
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Abstract
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.
Acknowledgements
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Keywords
Corporate sustainability,Reputation,Value relevance
  • Economics and Business - Social Sciences
  • Philosophy, Ethics and Religion - Humanities
Funding Records
Funding Reference Funding Entity
PEst-OE/EGE/UI0315/2014 Fundação para a Ciência e a Tecnologia