The persistence of green goodwill
- 185 Downloads
Civil coercion has its limitations, government regulation is only as effective as enforcement and investors base their estimates of firm value on information available from the firms themselves and from other sources. While voluntary disclosure is construed as being selective or incomplete, negative non-financial news such as details of fines imposed for environmental violation is reflected in lower stock prices for a short duration. This paper evaluates the persistence of goodwill capital for a sample of Indian companies from select industries, graded by their environmental performance. We conclude that investor concern differs across industries and that the correlation of environmental performance with firm valuation is, at best, weak and short-lived. Periodic scrutiny and announcement of industry environmental performance by appropriately equipped independent agencies could help coordinate and sustain stake-holder pressure on industry.
KeywordsEmerging markets Green goodwill Implicit liabilities Civil regulation
The views expressed in this article are of the authors themselves and do not necessarily reflect those of any organization.
- Cleantech Venture Network (2006) http://cleantech.com/index.cfm?pageSRC=CleantechDefined.
- Farzin, Y. H., & Kort, P. M. (1998). Pollution abatement investment when environmental regulation is uncertain. FEEM Working Paper No. 75.98, November 1998.Google Scholar
- Goodman, S. L., & Det Norske Veritas (DNV). (1998). Is ISO 14001 an important element in business survival? The Quality Magazine of Australia. June 1998.Google Scholar
- Gupta, S., & Goldar, B. (2003). Do stockmarkets penalise environment-unfriendly behavior? Evidence from India. New Delhi, India: Centre for Civil Society.Google Scholar
- Hartl, R. F., & Kort, P. M. (1996). Capital accumulation of a firm facing an emissions tax. Journal of Economics, 63(1), 1–23.Google Scholar
- Makower, J. (1993). The E-Factor: The bottom-line approach to environmentally responsible business. New York: Times Books.Google Scholar
- Morales, A. (2007). British Airways’ carbon offsetting is ‘Risible’, lawmakers say. Bloomberg. www.fleetbuzz.com/forums//index.php?showtopic=14117.
- Piasecki, B., & Asmus, P (2006) “Why Wall Street is Greener than the White House”, renewable energy. Access, 19 February, 2006. http://www.renewableenergyaccess.com/rea/news/story?id=43739.
- Porter, M. E., & van der Linde, C. (1995). Green and competitive: Ending the stalemate. Harvard Business Review, 120–134.Google Scholar
- Reinhardt, F. L. (2000). Down to earth: Applying business principles to environmental management. Boston, USA: Harvard Business School Press.Google Scholar
- Reuters Limited (2007) GE issues credit card aimed to cut emissions. http://www.reuters.com/article/idUSN2532739020070725.
- Sokri, A., & Zaccour, G. (2006). A differential game of environmental regulation and information. In Presented at the 12th international symposium on dynamic games and applications, France, July 2006.Google Scholar
- Sridharan, R. (2004). Features: BT Special: India’s Greenest Companies. Business Today, October 24.Google Scholar