The value relevance of the environmental impact of firms: Evidence on data provided by the impact-weighted accounts initiative
Master thesis
Permanent lenke
https://hdl.handle.net/11250/3040209Utgivelsesdato
2022Metadata
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- Master of Science [1613]
Sammendrag
In the absence of sophisticated and clearly defined ESG metrics, companies’
positive and negative impacts on the planet are likely to be absent from decisionmaking.
To provide accurate signals for business leaders and investors, and
to allow firms to internally generate company impact data, rather than using
external rating agencies, company impact should be connected to the financial
statement. Impact-weighted accounts are a line on the financial statement,
such as the income statement or the balance sheet, to supplement the financial
health and financial performance by reflecting companies’ positive and negative
impacts on the customers, employees, environment, and overall society. The
idea of impact-weighted accounts is based on a project from Harvard Business
School. Their mission is to drive the creation of financial accounts that reflect
companies’ financial, social, and environmental performance. This thesis
investigates the value relevance of the environmental impact, measured by
impact-weighted accounts, of selected firms from 2010 to 2019. Using various
types of regression models, we find robust evidence of a positive, statistically
significant coefficient on environmental impact. Therefore, our results suggest
that firms’ environmental impacts are associated with their stock price and
Tobin’s Q, respectively. In addition, these relations are more pronounced for
stock prices and Tobin’s Q during the second half of our sample period. Overall,
these results suggest that the environmental impacts of firms, measured by
their impact-weighted accounts, are relevant to their values.
Beskrivelse
Masteroppgave(MSc) in Master of Science in Business, Accounting and Business Control - Handelshøyskolen BI, 2022