Graduation Year

2018

Date of Submission

12-2017

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics-Accounting

Reader 1

Matthew Magilke

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Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2017 Anna M. Gurr

Abstract

As environmental responsibility (ER) gains momentum in the corporate and stakeholder world, it is imperative to understand the relationship between ER and financial performance. While there is prior research looking at this relationship, this study provides further insight into the specific effects of negative and positive ER. In addition, it looks over the years 2008-2011 having implications for companies about the effects of their ER even through financial hardships. This study uses a widely respected corporate social responsibility database, in which ER scores were separated from. In this study, 287 firms in the S&P 500 are examined through times-series regression analyses. The results reveal that positive ER had a negative relationship with financial performance indicators Tobin’s q and ROA. However, negative ER had such strong positive relationship with financial performance in both measures, that when looking at the effect of net ER, the relationship was tipped back to positive. This indicates that negative ER worsens a company’s financial position more than spending on positive ER initiatives.

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