Carbon performance and firm value of the world's most sustainable companies

Ramzi Benkraiem*, Fatima Shuwaikh, Faten Lakhal, Assil Guizani

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

This study examines how carbon performance affects a firm's market value. It also studies how this effect is driven by leadership, gender diversity and innovation capacity. This study used a panel of the world's most sustainable companies ranked according to Corporate Knights between 2013 and 2019. The results revealed that carbon performance positively influenced firm market value, thereby indicating that investors rewarded firms with low levels of carbon emissions. This positive effect was more prevalent in firms with a high level of gender diversity and innovation capacity. The findings also demonstrate that rank-up and high-polluting firms continually increased their efforts to be sustainable, which increased the positive effect of carbon performance on firm value. Our results are robust to alternative measures and concerns about endogeneity.
Original languageEnglish
Article number106002
JournalEconomic Modelling
Volume116
DOIs
Publication statusPublished - Nov 2022
Externally publishedYes

Keywords

  • Carbon performance
  • Firm value
  • Gender diversity
  • Innovation capacity
  • Sustainability

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