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The Price of Environmental Sustainability: Empirical Evidence from Stock Market Performance in China

by 1 and 1,2,*
1
School of Finance/MBA School, Zhongnan University of Economics and Law, No. 182 Nanhu Avenue, East Lake High-Tech Development Zone, Wuhan 430073, China
2
Academy of Mathematics and Systems Science, Chinese Academy of Sciences, No. 55 Zhongguancun East Road, Haidian District, Beijing 100190, China
*
Author to whom correspondence should be addressed.
Sustainability 2017, 9(8), 1452; https://doi.org/10.3390/su9081452
Received: 23 July 2017 / Revised: 13 August 2017 / Accepted: 15 August 2017 / Published: 17 August 2017
(This article belongs to the Section Economic and Business Aspects of Sustainability)
Chinese manufacturers, which produce nearly one-fourth of global manufacturing outputs, play important roles in the global supply chains for many products. The Chinese government proposed the “Made in China 2025” plan to help manufacturers upgrade their technology, so that the country will become a green and innovative “world manufacturing power”. It is important for researchers, practitioners, and the government to know the benefits and costs of being environmentally sustainable. In this paper, we investigate the effects of environmentally sustainable announcements of Chinese firms in the manufacturing, and the wholesale and retail industry on their stock market performance. First, we find negative market responses, which are significant in scale and statistics. Second, the stock market reactions are different for firms in different industries. Third, the stock market reactions are different in different years. Finally, we control the firm size and the book-to-market ratio with the Fama–French three factor model. The result is highly consistent with the one from the simple market model. View Full-Text
Keywords: environmental sustainability; supply chain management; stock market reaction; event study; time pattern environmental sustainability; supply chain management; stock market reaction; event study; time pattern
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MDPI and ACS Style

Li, B.; Wu, K. The Price of Environmental Sustainability: Empirical Evidence from Stock Market Performance in China. Sustainability 2017, 9, 1452. https://doi.org/10.3390/su9081452

AMA Style

Li B, Wu K. The Price of Environmental Sustainability: Empirical Evidence from Stock Market Performance in China. Sustainability. 2017; 9(8):1452. https://doi.org/10.3390/su9081452

Chicago/Turabian Style

Li, Biao; Wu, Kekun. 2017. "The Price of Environmental Sustainability: Empirical Evidence from Stock Market Performance in China" Sustainability 9, no. 8: 1452. https://doi.org/10.3390/su9081452

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