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Is There Value Creation in the Banks Listed in the Dow Jones Sustainability Index Europe?

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Responsible Business in a Changing World

Part of the book series: CSR, Sustainability, Ethics & Governance ((CSEG))

Abstract

The banking sector since 2001 has seen an increasing evolution in the number of banks that engage in sustainability in Europe. However, this evolution has been slower when compared to the other sectors of activity. It should be noted that the number of empirical studies in this particular sector in this region covering a specific period of study, which includes the global financial crisis, is scarce. The present study evaluates the value relevance of banks listed in the Dow Jones Sustainability Index Europe using a sample of 66 European banks in the stock markets of France, Germany, Italy, the Netherlands, Norway, Spain and the United Kingdom. From 2001 to 2013, the period under review presented a major growth in sustainable investments. Considering the global financial crisis, it was studied in two subperiods, pre and post crisis. Therefore, by using a modified Ohlson model and applying a panel data methodology for the empirical research, consisting of a combination of time series and cross-sectional data in a joint test, it enabled to control individual unobservable heterogeneity as well as the endogenous nature of the explanatory variables. The study found that banks listed in the Dow Jones Sustainability Index Europe are associated with higher market valuations and have a direct effect on stock prices by modifying the value-relevance of financial information. The global financial crisis has led investors to pay attention to sustainability in the banking sector in the European markets and began to include ethical principles in their investment strategies. These findings have important information for both investors and stakeholders, as well as market regulators and policymakers. This empirical study contributes to the existing literature and encourages investors to play a significant role in the sustainable development of such an important sector of society.

For author “Irene Guia Arraiano”, Scopus ID: “57193071489”.

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Notes

  1. 1.

    The information of the banks included in the DJSI over the 2001-2013 period is in the Appendix.

Abbreviations

CFP:

Corporate Financial Performance

CSP:

Corporate Social Performance

CSR:

Corporate Social Responsibility

DJSI:

Dow Jones Sustainability Index

EIRIS:

Ethical Investment Research Service

GMM:

Generalized Method of Moments

SAM:

Sustainability Asset Management

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Acknowledgements

The author thanks to RobecoSAM for providing the data required for this research. The author would also like to acknowledge for improve the manuscript greatly with Reviewer’ suggestions regarding data and limitations of the study.

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Authors and Affiliations

  1. Lisbon Accounting and Business School, Lisbon Polytechnic Institute, Lisbon, Portugal

    Irene Guia Arraiano

Authors
  1. Irene Guia Arraiano
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Corresponding author

Correspondence to Irene Guia Arraiano .

Editor information

Editors and Affiliations

  1. Faculty of Economics and Business, University of Cantabria, Santander, Spain

    Belén Díaz Díaz

  2. Faculty of Economics and Business, Loyola University New Orleans, New Orleans, USA

    Nicholas Capaldi

  3. London Metropolitan University, London Guildhall Faculty Business & Law, London, UK

    Samuel O. Idowu

  4. Cologne Business School, Cologne, Germany

    René Schmidpeter

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Funding

This study was funded by Polytechnic Institute of Lisbon under the Research, Development, Innovation and Artistic Creation Project (IDI&CA)-2017 referenced by IPL/2017/GIIPS5/ISCAL), this paper is part of it.

Availability of Data and Materials

The datasets analysed during the current study are not publicly available due but are available from the corresponding author on reasonable request.

Authors’ Contributions

The author carried out all sections of the manuscript.

Consent for Publication

Informed consent was obtained from author of the study.

Competing Interests

The author declare that she has no competing interests.

Appendix

Appendix

Table 4 The two types of information of banks considered in the sample
Full size table

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Arraiano, I.G. (2020). Is There Value Creation in the Banks Listed in the Dow Jones Sustainability Index Europe?. In: Díaz Díaz, B., Capaldi, N., Idowu, S.O., Schmidpeter, R. (eds) Responsible Business in a Changing World. CSR, Sustainability, Ethics & Governance. Springer, Cham. https://doi.org/10.1007/978-3-030-36970-5_4

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