The purpose of this study is to examine how environmental factors influence a firms’s stock price. This paper analyzes the theory in two parts: (1) investors’ reactions to the eco-friendly (-harmful) companies, and the relationship between environmental performance and the expected stock return; (2) the relationship between firm’s environmental performance and intangible assets, and the relationship between firm’s intangible assets and firm’s market value. In this paper, I suggest two hypotheses. The first hypothesis is that fewer investors demand ownership shares in eco-harmful companies. Hence, I would expect to see higher prices for eco-friendly companies. The second hypothesis is positive environmental performance could increase the company’s profit and market value. This performance then increase the company’s stock price.
Yu, Yiqun, "How does Environmental Performance Influence a Firm’s Stock Price?" (2020). Senior Independent Study Theses. Paper 8848.
environmental performance, market value, Tobin’s q, CAPM model, externalities, utility
Bachelor of Arts
Senior Independent Study Thesis
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