Corporate Sustainability Commitment, Firm Characteristics, and Stock Performance: Evidence from the Oil and Gas Industry

摘要

This study is a diagnosis of the firm characteristics of sustainability leaders in the oil and gas industry. Sustainability leaders are much larger in asset size. These companies use moderate but slightly higher financial leverage. Sustainability leaders are significantly more profitable than their size-matched peers. They also invest more in research and development. Despite the smaller percentage amount of free cash flow at their discretion, sustainability leaders manage to control risks in all three dimensions of growth: economic, environmental and social. The investment community recognizes and rewards sustainability commitment. The annual stock return of sustainability leaders is significantly higher than the size-matched control portfolio. The outperformance persists after controlling for market risk, size and value premiums.