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When do Appointments of Corporate Sustainability Executives affect Shareholder Value?

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Friday, 27 April 2018, 11:00

Friday April 27, 2018. 11:00 AM. When do Appointments of Corporate Sustainability Executives affect Shareholder Value? Ravi Subramanian, Georgia Tech. Sponsored by Rutgers Business School, Supply Chain Management.  Please register here.

Although there is a growing literature on environmentally and socially sustainable practices and their relationships with various measures of firm performance, little is known about the nature of the empirical link between appointments of corporate sustainability executives (CSEs) and financial performance. We add to the understanding of this link by estimating the stock market reactions to 111 announcements of CSE appointments made by publicly listed firms during the period 2000–2016. The evidence suggests that although the stock market reaction to CSE appointments is, overall, value neutral, the stock market reacts differently depending upon certain firm- and industry-specific conditions. We find that the stock market reacts more positively when announcing firms specify focused as opposed to broad responsibilities for the CSE appointee, and in instances where the announcing firms faced an adverse sustainability-related event during the year prior to the announcement of CSE appointment. Further, the stock market reacts less positively for those announcing firms that operate in industries that experience relatively greater regulatory sanctions. Thus, our findings demonstrate nuances in the stock market reactions to CSE appointments, enabling executives and stakeholders to better understand the shareholder value effects of appointing CSEs to top management teams.

Location  Room 921, 1 Washington Place, Newark, NJ 07102 or Teleconference at 100 Rockafeller Rd, Piscataway, Township, NJ.