Effects of Green Business on Firm Value

Abstract

Shareholders have traditionally been a firm’s greatest constituents, but new stakeholder models are emerging that suggest firms have a greater obligation to society than simply maximizing shareholder profits. This concept of Corporate Social Responsibility (CSR) is becoming a major point of interest for many companies. One aspect of CSR is environmental responsibility, which refers to the degree to which firms act in a responsible manner in the natural environment. Research Questions: Do corporations go “green” to benefit of their shareholders, or do shareholders see little financial benefit from increased environmentalism? If there is no financial benefit to acting responsibly towards the environment, what motivation do firms have to continue to pursue these initiatives?