The Economic Value of Corporate Eco-Efficiency
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Nadja Guenster RSM Erasmus University SRI in the Rockies September 27, 2005 http://bit.ly/wu95We
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The Economic Value of Corporate Eco-Efficiency
- 1. The Economic Value of Corporate Eco-Efficiency Nadja Guenster RSM Erasmus University SRI in the Rockies September 27, 2005
- 5. METHODOLOGY: FAMA-MACBETH (1973, JPE) We estimate 24 quarterly regressions from 1997-2002: Performance measure i1 = 1 + 1 Eco-efficiency i1 + 1 X i1 + i1 . . . Performance measure i24 = 24 + 24 Eco-efficiency i24 + 24 X i24 + i24 Time-series statistics This approach allows us to investigate the time-variation of the effects of eco-efficiency on firm performance
- 7. EXAMPLE OF RESULTS *** significant at 1% level ** significant at 5% level * significant at 10% level (-1.74) (-1.35) -6.36 E -6 * -8.44 E -6 SALES (-5.95) (-6.93) (-5.95) (-6.84) -2.39 *** -4.04 *** -2.33 *** -3.99 *** DEBT / ASSETS (-4.64) (-8.98) -2.62 E -6 *** -4.98 E -6 *** SIZE (0.10) (0.69) (0.19) (0.87) 0.01 0.06 0.01 0.07 ECO HIGH (-7.69) (-6.72) (-7.91) (-7.53) -0.38 *** -0.37 *** -0.39 *** -0.39 *** ECO LOW (7.30) (24.10) (7.66) (25.03) 0.55 *** 4.71 *** 0.56 *** 4.77 *** Intercept Ind.- adj. ROA ROA Ind.- adj. ROA ROA We find a positive and asymmetric relation between eco-efficiency and ROA
- 9. EXAMPLE OF RESULTS -3.11E -6 *** -1.25E -6 *** -1.31E -6 *** -3.21E -6 *** Size 11.01*** 3.02*** 4.48*** 11.27*** R&D 0.01 0.01*** -0.00 -0.02 AGE 1.39*** 0.36*** 1.26*** 1.49*** SG -0.02 0.02 -0.03 0.02 ECO HIGH -0.32*** -0.10*** -0.32*** -0.31*** ECO LOW 1.79*** 0.45*** 0.12 1.81** Intercept Trimmed Q Log(Q) Q Ind. Adj. Q We find a positive and asymmetric relation between eco-efficiency and Q *** significant at 1% level ** significant at 5% level * significant at 10% level
- 11. ECO-EFFICIENCY AND TOBIN’S Q: A time-varying relation (II) -3.59E -6 *** -2.87E -6*** Size 8.46** 14.09*** R&D -0.03 0.04 * AGE 1.36*** 1.62*** SG ECO HIGH ECO LOW 2.27 *** 1.36 *** Intercept Period 2 Q Period 1 Q -0.42 *** -0.24 *** -0.20 0.21 *** During the first half of our sample period, we find that the least eco-efficient and the most eco-efficient companies trade at a discount. During the second half, the most eco-efficient companies trade at a significant premium.
- 12. ECO-EFFICIENCY AND TOBIN’S Q: A time-varying relation (III) The valuation differential between the most eco-efficient and the least eco-inefficient companies increases over time Value of most eco-efficient companies versus least eco-efficient companies