Corporate Reputation Review

, Volume 20, Issue 1, pp 105–122 | Cite as

Environmental Management’s Impact on Market Value: Rewards and Punishments

  • Amy McMillanEmail author
  • Timothy C. Dunne
  • Joshua R. Aaron
  • Brandon N. Cline


Concerns regarding changes in the natural environment have led to an increase in research regarding environmental management (EM) practices. Studies examining the financial impact of such practices have been inconclusive. Drawing on agency theory and the resource-based view of the firm, we provide a comprehensive examination of the market’s reaction to firms identified by Newsweek’s Green Rankings as the best (top 100) and worst (bottom 100) for EM reputation among the largest 500 firms in the United States. Specifically, we investigate the extent to which the market reacts differently to service firms and manufacturing firms in regards to environmental reputation signals. We find that the market responds favorably to positive environmental management reputation signals for service firms and to negative environmental management reputation signals for manufacturing firms. Post hoc analysis reveals that both service firms and manufacturing firms are rewarded for being ranked “in the middle” of the Newsweek Green Rankings.


environmental management market value corporate reputation agency theory service firms manufacturing firms 


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Copyright information

© Macmillan Publishers Ltd & Reputation Institute 2017

Authors and Affiliations

  • Amy McMillan
    • 1
    Email author
  • Timothy C. Dunne
    • 2
  • Joshua R. Aaron
    • 3
  • Brandon N. Cline
    • 4
  1. 1.Department of ManagementEast Carolina UniversityGreenvilleUSA
  2. 2.Department of Management, College of Business and EconomicsBoise State UniversityBoiseUSA
  3. 3.Department of ManagementMiddle Tennessee UniversityMurfreesboroUSA
  4. 4.Department of Finance and EconomicsMississippi State UniversityStarkvilleUSA

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