Ameer Othman 2012 JBE Sustainability Practices and Corporate Finance

Sustainability Practices and Corporate Financial Performance: A Study Based on the Top
Global Corporations
Author(s): Rashid Ameer and Radiah Othman
Source: Journal of Business Ethics, Vol. 108, No. 1 (June 2012), pp. 61-79
Published by: Springer
Stable URL: http://www.jstor.org/stable/41476277
Accessed: 29-03-2018 03:36 UTC
REFERENCES
Linked references are available on JSTOR for this article:
http://www.jstor.org/stable/41476277?seq=1&cid=pdf-reference#references_tab_contents
You may need to log in to JSTOR to access the linked references.
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide
range of content in a trusted digital archive. We use information technology and tools to increase productivity and
facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
http://about.jstor.org/terms
Springer is collaborating with JSTOR to digitize, preserve and extend access to Journal of
Business Ethics
This content downloaded from 111.223.252.29 on Thu, 29 Mar 2018 03:36:35 UTC
All use subject to http://about.jstor.org/terms
J Bus Ethics (2012) 108:61-79
DOI 10.1007/s 1055 1-01 1-1063-y
Sustainability Practices and Corporate Financial Performance:

A Study Based on the Top Global Corporations
Rashid Ameer * Radiah Othman
Received: 29 July 2010/ Accepted: 22 September 201 1 / Published online: 15 October 201 1
© Springer Science+Business Media B.V. 201 1
relationship
Abstract Sustainability is concerned with the impact of between corporate social responsibilities
present actions on the ecosystems, societies, and environ-
practices and corporate financial performance.
ments of the future. Such concerns should be reflected in
the strategic planning of sustainable corporations. StrategicKeywords Environment • Ethics • Diversity •
intentions of this nature are operationalized through the Performance • Sustainability
adoption of a long-term focus and a more inclusive set of
responsibilities focusing on ethical practices, employees,
environment, and customers. A central hypothesis, that weIntroduction
test in this paper is that companies which attend to this set
of responsibilities under the term superior sustainableThe concept of sustainable development first became the
practices, have higher financial performance compared tofocus of international policy- making with the publication
those that do not engage in such practices. The targetof the Brundtland Report (WCED 1987), which presented
population of this study consists of the top 100 sustainablethe outcome of the World Commission on Environment
global companies in 2008 which have been selected from aand Development and served as an important foundation
universe of 3,000 firms from the developed countries andfor the UN Earth Summit in 1992. That report defines
emerging markets. We find significant higher mean salessustainable development as development that meets the
growth, return on assets, profit before taxation, and cashneeds of the present without compromising the ability of
flows from operations in some activity sectors of thefuture generations to meet their own needs. The report
sample companies compared to the control companies overprovided what is arguably the most frequently quoted
the period of 2006-2010. Furthermore, our findings showdefinition of sustainable development, though of late, sus-
that the higher financial performance of sustainable com-tainability has been interpreted in different ways. Robinson
panies has increased and been sustained over the sample. (2004) argues that apparent difficulties in defining the
Notwithstanding sample limitation, causal evidenceconcept of sustainability have led sustainability practices to
reported in this paper suggests that, there is bi-directionalbe indistinguishable from green-washing, and branded as
delusional, mis-representational, and hypocritical.
At the broadest level, Gray (2010) defines sustainability
as a systems based concept and, environmentally at least, it
R. Ameer (E3) is probably difficult to conceptualize it as anything below
Accounting Research Institute, Faculty of Accountancy,
planetary and species level. A simple assessment of the
Universiti Teknologi Mara, Shah Alam Selangor 40450,
Malaysia relationship between a single organization and planetary
e-mail: rashidameer@salam.uitm.edu. my sustainability is virtually impossible. Aras and Crowther
(2008) argue that sustainability is actually based upon
R. Othman
efficiency in the transformation process and equity in the
School of Accountancy, College of Business,
Massey University New Zealand, Auckland, New Zealand distributive effects. The management of sustainability
e-mail: radiahothman@gmail.com performance requires a sound management framework
£) Springer
62 R. Ameer, R. Othman
which (McGuire et al. 1988).

fìrstly links While acceptance of the latter
envir
with the argument
business, for the business case for social responsibility
compe has
and, been growing; it remains that
secondly, to be seen, whether relationship
inte
information with economic business information and sus- between social responsibility and financial performance is
tainability reporting (Schaltegger and Wagner 2006). perpetual.
Managing corporate sustainability requires the examination The impact of environmental management and envi-
of the impacts of social and environmental initiatives on ronmental protection activities on corporate economic
overall corporate profitability (Epstein and Roy 2001). performance has also been debated strongly for many
In this paper, we approach the concept of 'sustainability years. Schaltegger and Synnestvedt (2002) argued that
practices' and 'sustainable reporting' synonymously, as a there is no natural or mechanical law automatically linking
corporation's account of its legitimate existence in societyenvironmental performance with economic performance.
amid growing concern about the lack of harmony between The relationship holds true only in specific cases, where the
organization, environment, and societies. Tenuta (2010)environmental and health regulations provide strong eco-
suggests that the sustainability report is the most operativenomic incentives to companies, to make continuous
instrument to relate the organization with its stakeholders,improvements in the business operations. Environmental
and the absence of a single referential form and of commonissues must be of certain, [maybe] major importance, to
comparison parameters, limits its communication of [sus- have some impact on the company's economic perfor-
tainability] considerably. In this paper, we use reporting ofmance. A review of theoretical framework which thrives on
corporate sustainability practices, as a manifestation of theprecision and power to explain this alluded relationship is
integration of environmental and social managementas follows.
within business processes, and examine its impact on According to Schaltegger and Synnestvedt (2002)
financial performance using a sample of top global cor-dynamic theoretical framework, for environmental protec-
porations. Information was drawn from a content analysistion to be rewarding, company management would have to
of companies' sustainability reports and from secondary identify the specific set of restrictions, opportunities,
sources on the corporate financial performance. The reviewthreats, and incentives. As a next step, objectives and goals
of corporate sustainability reports was not meant to bewould have to be defined, plans developed and concrete
exhaustive but it was comprehensive enough to uncoveraction taken. This new rethinking will then result in a new
information about sustainability practices. Thus, our eval-and different environmental profile, which in turn may
uation of sample companies' under consideration in based result in cost savings. They postulate and illustrate that,
on a combination of observation, subjective judgment, andbeginning at a certain level of economic success; every
objective calculations. environmental protection activity will reduce the economic
There are number of theoretical works conceptualizing success, which can be expected to decrease in the short
the link between environmental performance, social per- term. As long as companies are able to develop environ-
formance, and financial performance. Much earlier, Carrollmentally friendly technologies, which reduces the marginal
(1979) argued that, the social responsibility of a business costs, the economic performance improves. Since there
includes economic, legal, ethical, and discretionarymight be systematic differences in marginal costs of
expectations that society has of organizations at a given environmental protection across industries and across
point in time. Brown (1990, p. 25) suggested that 'to speakcountries (due to legislations), various economic outcomes
of an organization as 'moral community' allows us to are possible. The major conclusion that can be drawn from
acknowledge the moral significance of the human interac-Schaltegger and Synnestvedt (2002) theoretical framework
tions and relationship within organizations'. Wood (1991) is that, relationship between environmental performance
categorized principles of social responsibility and process and economic success can vary at given level of economic
of social responsiveness as throughputs, and firm's finan-success. The economic effect of corporate environmental
cial performance was as one dimension of overall socialperformance can also vary at a given environmental per-
performance. Research seeking to link social responsibility formance level. The correlation between economic and
with financial performance exploded during 1980s withenvironmental performance, or in other words the question
two opposing views (Fredrick 2006). One view is that the of 'when it pays to be green', does not only depend on
firm faces a trade-off between social responsibility and company external variables (regulations, for example) but
financial performance. Those holding this view proposeit substantially depends on internal variables influenced by
that firms incur costs from socially responsible actions. A management.
second, contrasting viewpoint is that the explicit costs of Wagner and Schaltegger (2003) put forward neoclassi-
corporate social responsibility are minimal and that firmscal environmental economics viewpoint linking environ-
may actually benefit from socially responsible actionsmental and social issues. According to this view, the
Ф Springer
Sustainability Practices and Corporate Financial Performance 63
purpose of environmental regulations is to that

authors argue correct
the for
researchers shoul
negative externalities, which diminish social welfare.
the intermediate performance measures
satisfaction
Environmental regulations reduce andexternal-
these negative brand loyalty. Those
value
ities; however, create additional costs environmental
thus protection, philanth
reducing profits.
They argue that firms in industries
ethical
with
business
higherpractices
environ-are perceived b
mental impact face a competitive good corporate
disadvantage, citizens, and are able
if stringent
regulations burden them with higher environmental
themselves costs
from competitors and attract
relative to other industries (see (Cacioppe
also e.g., et al. 2007).
Epstein 1996).
However, another opposing "revisionist
Accordingview"to thesuggest
sustaining organizati
that, environmental performance ture (see,
would e.g., cost
induce Buchanan
sav- et al. 2005; R
Pettigrew
ings, increase in sales and thus improve 1985), perfor-
economic several changes in or
mance. According to this revisionist view, an
figurations, inversely
processes, and initiatives
U-shaped curve is the best possible description
training (Waddock of and
rela-
Graves 1997) f
tionship between environmental and safety
and all have
economic direct costs. How
perfor-
mance (Wagner and Schaltegger 2004). In the
conceived 'revisionist'
corporate social responsibility
view companies have an incentive to research
at managing new tech-
community relations may
reductions.
nologies and production approaches Philanthropic
to reduce negative financial c
externalities. In this regard, Environmental Management
reflection of organizational adjustment
Systems (EMS) has helped companies to Godfrey
inequity. systematically
(2005) asserts that ph
identify, measure and appropriately
mustmanaged theiras
be perceived envi-
a genuine manifesta
ronmental obligations and riskunderlying
(Epstein and Roy
social 2001).
responsiveness in orde
Thus, according to the 'revisionist'
value. view,
Pattenat(2008)
least finds
in a evidence of
dynamic perspective (or possiblybetween
even in the announcement
short term); of corporate
the tsunami
the ability to innovate and to develop relief effort
new technologies and and subsequ
production approaches is a greater determinant
market of com-
value of such donating firms. In
tionship
petitiveness and economic success. between
According social responsibilit
to Rimmer
et al. (1996) a critical problem forfinancial
sustainability is winning
performance varies from one fir
time, especially during periods when
to stakeholder
it is perceived
influence
that capacity and si
costs exceed benefits, and in such a period
gencies of uncertain
(Barnett 2007).
duration, best practice may be discontinued as not cost
effective. However, in the long-run, perceived benefits are
greater than perceived costs. Hypotheses
Wagner (2007) proposed an integration framework in
which social and environmental aspects are
This paper builds integrated
on the study by Lopez et al.with
(2007) which
business management. The notion
examinesof integration'
the relationship means
between sustainability and cor-
poraterelated
the linkages of goals and activities performance using a multidimensional construct
to socio-envi-
ronmental management with core based on economic,
managerialenvironmental,processes
and social indicators.
and functions in those areas which
Lopez are of used
et al. (2007) strategic impor-
a sample of 55 firms from the Dow
tance to the firms, namely corporate strategy,
Jones Sustainability quality
Index (DJSI) and compared them with
management, health and safety, and social issues. He
55 firms from the Dow Jones Global Index (DJGI) for the
period of of
identified four intermediate drivers 1998-2004. Furthermore,perfor-
economic they modeled the
mance - efficiency-related, market-related, image-related,
direction of causality from the Corporate Social Respon-
and risk-related. He integrates sibility
social and toenvironmental
(CSR) variable Profit before taxation after con-
management with the core processes.
trolling for firmThis integration,
size, leverage, and other factors. They
leads to cost savings, innovativefoundproducts,
a negative coefficient high market
for the CSR variable.
share and better profit margins, Ourand workreduction
is different from thatin of work-
Lopez et al. (2007) in
related accidents and injuries. Wagner (2011)100posits
that firstly, we re-screened that
sustainable global compa-
'integration' of environmental and sustainability
nies using aspects
the four indices highlighting their commitment
to sustainableon
with general management have effect practices.
both, Secondly, in Lopez et al. (2007),
economic
performance and environmental the differentiation exists between
performance. Thissustainable
idea is firms and
similar to Pivato et al. (2008) who drew firms
non-sustainable attention
by virtue ofto the
information disclosure
importance of mediating variableson sustainability,
in the study but ourof methodology
social is superior to
this approach because
responsibility and corporate performance we further graded
relationship. The a company's
Springer
sustainable obtain
contribution
lower cost of equity capital, thereby indicating
Lopez et al. (2007)
that financial tested
markets value CSP. We investigated all the
firms according
performance of to their activity sectors to determine
companie
classification, thereby
whether significant differences exist in the evolution of c
companies the performance
in the indicators over the period of
Informa
in the 2006-2010. In this connection the following
Petroleum sector, hypotheses
and leads were tested: unreliable
to c
relating to whether sign
HI Sales/revenue growth (SG) of the Global most sus-
performance of companie
tainable companies is higher than SG in the control com-
100 sustainable companies
panies over the period of 2006-2010.
after referred to as the
company asH2 Return
a oncontrol
Assets (ROA) of the Global most sus- com
if its total tainable
sales companies is higherare
than ROA in thewith
control
firm's companies
total salesover the period of 2006-2010.
in that y
find a matching company
H3 Profit before tax (PBT) of the Global most sustainable
assets or even total mar
companies list is higher than PBT in the control companies
year end.
over the period of 2006-2010.
We selected a series of variables to measure the com-
H4 Cash flows from operating activities (CFO) of the
pany performance, focusing on the growth, return, profit-
ability and cash flows of the companies adopting the Global most sustainable companies are higher than CFO in
variables used by Lopez et al. (2007). These variables the
are control companies over the period of 2006-2010.
sales (revenue) growth (SG), return on assets (ROA), profit
before tax (PBT), and cash flows from operating activities
(CFO) in US$.
Data and Methodology
According to Lopez et al. (2007) changes in man-
agement practices should be reflected in the profit and
Our research design combines both quantitative and qual-
loss statement, produced by an increase in business
itative methods. Specifically, the qualitative approach is
volume, implying an increase in sales volume (revenue)
used in the content analysis procedure and the quantitative
only in those companies which have adopted sustainable
approach is employed for statistical analysis. The following
practices. Roberts and Dowling (2002) argue that com-
sections explain the characteristics of the target population,
panies with good corporate reputation in their commu-
sources of data, sustainable practices checklist, content
nities are better able to sustain their superior outcomes
analysis procedure, and appropriate statistical techniques
over other firms because their intangible character makes
that are used for testing the hypotheses.
replication by competing firms considerably more diffi-
cult. Adam and Zutshi (2004) suggest that firms' adop-
tion of sustainable strategies should grant them Characteristics of the Target Population
competitive advantages over other firms where no such
implementation occurs. According to marketing litera-The target population for this study is the top 100 sus-
ture, a stronger inimitable competitive advantage tainable global companies in 2008. The names of these
enhances product innovation and introductions and sales companies were obtained from www.globall00.org which
force effectiveness, thus increasing cash flows and is an annual project of the Global Sustainability Research
profitability (Dowling 2001). Kurucz et al. (2008) iden- Alliance. These companies have been selected from a
tify four categories of benefits that firms may attain from universe of 3,000 firms from the developed countries and
engaging in corporate social responsibility activities: (1) emerging markets, and they represent 95% of equities in
cost reduction; (2) competitive advantage; (3) developing North America, Europe and Korea, and 30% of equities in
reputation and legitimacy; and (4) seeking win-win emerging markets. The top ten per cent list of companies
outcomes. Efficient and reliable contracting with suppli- (or 300 companies) are screened by the Corporate Knights
ers, employees, and creditors should also lead to lower Research Group and Inflection Point Capital Management
contracting and monitoring costs for the sustainable firm against ten equally weighted Environment, Social, and
compared to other firms, thereby increasing the return on Governance (ESG) Key Performance Indicators (KPIs) and
assets (Roberts and Dowling 2002). Lee et al. (2009) a Transparency Indicator which is defined as a percentage
suggest that the leading corporate social performance of data points on which the company provides data and the
(CSP) firms proactively manage their CSP profile and level of GRI disclosure. These KPIs are defined as follows:
& Springer
Table 1 Sample distribution

1. Energy Sales (US$) divided by total direct and
productivity indirect energy consumption (gigajoules); Country N GICS industry sector N
2. Carbon Sales (US$) divided by total C02 and C02
productivity equivalents emissions (tones); Australia 4 Consumer discretionary 17
3. Water Sales (US$) divided by total water use (cubic Austria 2 Consumer staples 7
productivity meters); Belgium 1 Energy 6
4. Waste Sales (US$) divided by total waste produced Canada 3 Financials 19
productivity (tones); Denmark 3 Health care 6
5. Leadership Women on the corporate board (%) Finland 6 Industrials 17
diversity
France 6 Information technology 9
6. CEO-to-average Ratio of highest paid officer's compensation
worker pay to average employee compensation (3 years Germany 6 Materials 9
average); Italy 2 Telecommunication 3
7. % Tax paid Reported tax obligations paid in cash (3 years Japan 13 Utilities 5
average, %); The Netherlands 2
8. Sustainability Composite score of whether there is a Spain 3

leadership sustainability committee in the company and Sweden 5
whether a director is on it;
Switzerland 3
9. Sustainability pay Whether or not at least one senior officer has
link his/her pay linked to sustainability; United Kingdom 22
United States 17
10. Innovation R&D divided by sales (3 years average)
capacity Sources of data
These KPIs were developed by the Corporate Knights Reporting Initiative website www.globalreporting.org/
Research Group (CKRG), a signatory to the United GRIReports/. For some companies in our sample, a sus-
National Principles of Responsible Investment, with sup- tainability report was not available from either source;
port from Inflection Point Capital Management, and with rather their sustainability accomplishments were narrated
input from the Global 100 Council of Experts which is on their websites according to GRI Reporting categories.
comprised of thought leaders at the interface of sustain- For these companies only, we searched their WebPages to
ability and finance. Given their pedigree, these KPIs reflect collect information. For instance, Rio Tinto' s HTML sus-
the most meaningful indicators in the widest sense. The tainability report is located within the Sustainability section
CKRG identified these indicators after a comprehensive of its website. Inditex SA uses an interactive GRI Content
review of mainstream brokerage research, papers and Index navigating the sustainability report on its website.
reports contributed by fiduciary investors to the PRI Two companies did not have 2008 sustainability reports
Enhanced Research Portal, work by the Canadian Institute and therefore had to be excluded from the analysis.
of Chartered Accountants, and the annual Thomson Financial data for the testing of hypotheses were down-
Reuters Extel/UKSIF Socially Responsible Investing and
loaded from Thomson financiais Worldscope from 2006 to
Sustainability Survey. 2010 in US$ to facilitate comparison across countries.
All companies were scored relative to their industry
peers (these industry peers are not in the sample); each
Sustainability Evaluation Checklist
company receives a score of 0-1 per KPI and a score of
0-1 on the Transparency indicator. The sum of ten indi-There are no universally accepted sustainability standards,
cators and one Transparency indictor was normalized to or
a methodologies for measuring, assessing and/or moni-
scale of 0-100 and then companies were ranked on the
toring a company's progress towards sustainability. Indeed,
basis of this score. This process, in conjunction with a final
various methods, such as external audit, third party awards/
round of vetting from teams at Inflection Point Capitalaccreditation processes, standards/codes benchmarking of
sustainability (Singh et al. 2009), indices (Lopez et al.
Management and Global Currents Investment Manage-
2007), and non-quantifiable sustainability initiatives
ment, was used to winnow down the short list of 300 to the
Global 100 Most Sustainable Companies in the World, (Székely and Knirsch 2009), can be identified. The envi-
respecting the sector weightings for the MSCI ALL ronmental performance of a company can be defined by
Country World Index (ACWI). Table 1 shows the samplemeans of a firm's physical performance with regard to
distribution. environmental aspects based on physical environmental
performance indicators (Wagner and Schaltegger 2003).
We downloaded companies' sustainability reports for
the fiscal year end 2008 from their websites or the Global
Another approach is the use of Environmental Shareholder
& Springer
Value (ESV) and environ

activities prov
approach links
suresenvironm
than do
holder value drivers
social (Wag
goals (Ge
empirical we generated
measures that h
in
environmentalwhich com
performan
(Al-Tuwaijri
(2)et al. 2004)
environme
These
work-related questio
injury rat
(2004).
environmental There
ratings of a
ability Index).
diversity, 12 i
Recent standards.
studies have In
follo
score
input-output from
method +4
for
report
system-based in
concept.the
For
(2010) have significant
used an t
integr
ronmental question (item
performance o
results and significant
(2) internal v
tan
argue that form
the junction
of finan
framework adoption
for of
organizin s
mental and/or
performance. redes
We n
question: how do
materials compan
and/
mental and lighted,
social "our
respons
processes? to
For invest
this 1%
purpo o
(2) In 2008
environment, (3)the to
diver
dimension, of operating
using the p
stak
four 2008,
dimensions p. 13).t
because
serve as a reasonable
purchased ref
elec
tainable partner with
development. Our
recent studies (see,
searching e.g.,
for
and Roy (2001)
chase sustaina
1,572,00
include work
CO2 force dive
emissions
bribery, Report
corruption, 2008,
co
sourcing, Boardrights,
human of Dire
Schaltegger with
and it, the
Synnest cr
level of environmental
any employee p
the protection
environmental Code... th
mental ches of
protection. the Co
Their
proposed principles"
sustainability (A
m
the If
measurementa company
of susta
firstly, an we gave it
examination a s
of
selected individual fields
contribution (
m
secondly, an assessment
related to its
towards sustainable
employee dev
stat
combination total
of employ
these in
proposed a (%), managem
corporate sus
based on ment
three positio
principles:
and employees
environmental (in
integri
tenure per em
Content employee
Analysis (Ad
Procedu
2008, p. 33).
Content If a company reported a relatively
analysis hassmall positive contri-
been
(Rondinelli and
bution, we gave it a score Berry
of +2. A company 's relatively small 200
approach is positive
to contributionsearch
might be in the form of statements suchfor s
reduce it into
as that provided by Intel,mutually
which states that the company
argued that"promotes equal employment opportunity for all applicants
companies th
Springer
and employees, regardless of same

non-job-related
results again if the measure factors,
were to be duplicated. A
reliable
including but not limited to race, measurement
color, is one that allows
religion, for the same result
gender,
to be achieved
national origin, ancestry, age, marital status,on repeated
sexual occasions (De Vaus 1986).
orienta-
Adequateand
tion, gender identity, veteran status, reliability is a precondition
disability" (Intelof validity. The
Corporate Responsibility Report reliability
2008, of p.a scale
52). indicates
If a how free it is from random
company
error.
reported no tangible contribution in the One of the of
form moststatistics
commonly used
and indicators of
internal
data, we gave it a score of 1 ; and if consistency isdid
a company Cronbach's
not alpha coefficient rang-
report
ingscore
any information at all, we gave it a from 0 of
to 1,0with
(seehigher values indicating
Appendix 1 greater
reliability. Ideally,
for the list of questions). After grading thea items
Cronbach'sfor
alpha of in the range of
each
0.6-0.7
company, as a last step we summed up isthe
acceptable,
total while alphas for
scores below all
0.6 are consid-
ered poor, and
the events to obtain a company specific those value.
index over 0.8, good (Nunnally 1978). We
calculated
Our scoring approach is akin to Cronbach's alpha for
SustainAbility andthe items
the under EI, CI, DI,
and ETI finding
United Nations Environment Program these to
(UNEP) be equal to
which 0.885, 0.883, 0.858,
also
and 0.904,
uses 0-4 scores, where "0 means that the respectively,
area coveredthereby suggesting
by the that selected
[SustainAbility-UNEP] is not discussed
items from Fadulat all
et al. and
(2004) who "4"
adapted these items
from
means that the reporting [on the Stone (2001)
issue] were reliable for the multidimensional
is comprehensive
(SustainAbility-UNEP 1997). Though our choice of the
construct of sustainability.
number of items to gauge a company's commitment to a
particular social-environmental dimension is arbitrary but
Resultsprovides
we argue that our grading approach and Discussion a meaningful
approach to assess the sustainable development commit-

ments of the global organizations. In this
Othersection, we report the findings
comparative stud- regarding the four
ies, for instance, Morhardt et al. indices
(2002)CI, DI, EI,
have and ETI,
used more respectively,
than which are
100 items or more items to assess important not only
companies' in identifying the companies'
commitment to commit-
social-economic-environmental issues
ments tobut without
sustainable practices grading.
but also in helping to support
(or otherwise) hypotheses for each respective industry
Content Validity sector. For CI, there were two clusters: (1) Australia,
United Kingdom, and United States and (2) Canada,
France,
We established the content validity Japan,
of the and Switzerland.
items underlying European countries
each of these four indices by comparing them
(excluding UK) Belgium, Thewith the and Spain have
Netherlands,
items used by CSR rating agencies worldwide
relatively to index
lower values of the screen(Table 2).
companies for socially responsible investment.
For DI, A list
there were two clusters. of cluster includes:
This first
these CSR rating agencies was obtained
France, Japan,from theand
Australia, Bertels-
Switzerland. Although at the
mann Foundation report entitled, 'Who
first is some
ranking, who of in
the Corporate
European countries such as Italy,
Social Responsibility Rating? A survey of
Belgium, and internationally
Sweden appear very low, this is not surprising
established rating systems that measure
given the fact that theseCorporate
countries have greater concern for
Responsibility'. This report prolides a profile
diversity through and
immigration. Thethe
performance among
screening methods of more thanother
50 European
independent
countries varies
CSR onrat-
the diversity matters.
ing agencies worldwide (see Appendix
Furthermore,2 for
even details).
on the Wethe United States
diversity issues,
and Canada
matched the wording of statements usedfall inby
the third
theseclusters with index values less
agencies
to rank companies according to their
than 25. agreement with
The Japanese companies have those
performed better than
statements under each of our four indices. Where an exact companies in European countries, which is surprising given
occurred, we considered that item a valid item, although forthe very high power distance observed in Japan. This shows
some statements we did not find the exact or near match,that Japanese corporations have a distinct culture surpassing
and in these instances, the statements were placed in the the national culture especially when the organization is
'others' category. This procedure was repeated laboriously widely spread across the map of the world, and thereby being
for all items in four indices, and the results of this exercisesusceptible to global influences that gradually reshaping the
confirmed that most of the items were valid. way they work. Also, in furthering organizational objectives,
and for the sake of survival, the remolding of the organiza-
Reliability Analysis tional culture to one that is mostly acceptable in almost all
countries is a necessity.
Reliability refers to the purity and consistency of a mea- For the EI, there were also two clusters, the first
sure, to repeatability, to the probability of obtaining the including Japan and The Netherlands, and the second
Ф Springer
Table 2 Sustainability
N CI DI EI ETI
practices - country-level
analysis Australia 4 30.00 26.75 51.00 20.75
Austria 2 18.00 13.00 44.67 27.50
Belgium 1 24.00 15.00 46.00 12.00

Canada 3 27.67 21.66 52.33 23.00
Denmark 3 10.67 26.00 46.67 15.33
Finland 6 11.67 13.66 47.17 11.33

France 6 27.50 28.00 53.00 20.17
Germany 6 20.17 18.67 40.17 11.17

Italy 2 14.50 14.00 25.50 11.00
Japan 13 25.92 27.46 59.00 21.08
The Netherlands 2 22.00 20.00 56.00 24.00
Spain 3 22.00 24.67 45.33 39.00

Sweden 5 18.20 19.67 48.20 22.00
Switzerland 3 26.00 26.67 22.67 22.67
UK 22 30.95 19.27 44.82 26.01
US 17 37.00 23.00 56.76 26.24
including underlie the current

countries such public discontent
as with the opacity of
Canada, F
Though other
European countries
financial products. The Industrials, Information Technol- s
land, Denmark, ogy, and Telecommunication
Spain, Sweden, sectors lag behinds and
other t
have respectableactivity
index sectors in three values,
of the four indices. Morhardt
Italyet al. h
EI. Thus, (2002) have also foundconfirm
our findings significant dispersion in the that
envi- s
overwhelmingly associated
ronmental performance scores of industrialwith
sectors using en
mance by these SustainAbility/UNEP
global guidelines. companies This analysis reveals that und
concern about among the
the top global sustainable organizations there is com
environment a
considerable
Lastly, for the ETI dissimilarity in the
index, progress towards
the results the
with those obtained for
attainment of the other
sustainable development. These indices show thr
which was mainlymore emphasis on the eco-concentric issues
because most than ethno- co
centric issues.
close their policies on issues such a
Besides country and industry-level
contribution to political parties. analysis, we alsoInfor
analyzed the
their reports. We can identify items in each index (see Appendix 3) to only
Spain, United Kingdom,
expose differences in grading ofand
the underlyingUnited
constituent S
items of the index values. Clearly, there are differences
across underlying items within each index, and the dis-
Sustainable Practices - Industry
persion in the scores further highlights that not many Cl
companies have made tangible positive contributions, and
This section that several others
reports on have only
the made smallclusters
inroads in this b
classification. direction. The adoption
Overall, of superior sustainable
the Utilities practices is se
activity sector expected to produce
with the improvedhighest
performance for such inde
nity - 31.8; Environment Index - 5
companies, i.e., increased profitability could be observed as
Ethical practicesa result
- of27.8.
the exploitation of new resources and
This is innova-
follow
tions in manufacturing
Discretionary sector. Overallprocesses, which maythese
be reflected fin
industries have in increased sales (revenue) volume andbetter
performed greater profit in
Index category growth due to reduction in costs. Toto
compared sustain environmental
other ca
and Materials sector has
protection, a few companies atechnology
in information higher and
Environment and Ethical indices but is lower on the automobile industries, have implemented Product-based
Community and Diversity indices. Interestingly, Environment
the Management System (PBEMS) and Sustain-
financial sector has the lowest Ethical index value com- ability Management Systems (SMS) (McElhaney et al.
pared to activity sectors, a factor which can be said to 2005). The next section explores whether there are
& Springer
Table 3 Sustainability CI DI EI ETI

practices - industry-level
analysis
Consumer discretionary 27.24 26.24 52.29 24.47
Consumer staples 27.29 25.71 46.57 17.86
Energy 23.00 19.33 53.50 23.33
Financials 27.58 21.63 47.00 13.68
Healthcare 28.17 23.59 42.50 18.50

Industrials 21.88 20.71 47.82 14.70
Information technology 27.56 18.76 45.67 20.88

Materials 21.33 21.22 53.11 23.44
Telecommunication services 25.00 25.00 45.33 22.66
Utilities 31.80 22.80 53.80 27.80
significant differences
The between the
robustness econ
of ou
performance by of
companies
using thewith bett
Mann-W
otherwise as disclosed
for in their sustainabi
Industrials only, a
We find significant higher mean
Discretionary, and SG
Tel
CFO supported
in some activity for
sectors of three
the Glo
tainable companies compared
Materials, to the c
respectively
over the period of
the2006-2010.
Materials HI was
sector.
Global 100 most sustainable
application corporation
of sustaina
Industrial sector, i.e.,
most these companies
sustainable comph
higher sales growth compared
tion in their to control
business
in the same sector. H2 was supported
better financial perfo
Discretionary and Telecommunication
indicators in this pape
whose companies have significantly
though the global hig
com
to control sample 2008,
companies in the samo
the evolution
not the least, H3 shows
and H4 are
that accepted
the differe
Discretionary, Consumer
indicatorsStaples,
existed Ind
bet
communication services sectors, respe
nies, continued for
compared the t test results in and
2006-2009, Table 4 wi
2006-2
four least,
indices in Table 3, the while findings Lopezare et
The Consumer Discretionary
that differentiation sector
higher value for with
the four respect indices, to the and pe
higher ROA, PBT, and
was not consistent CFO
and did not compared
increase over time over the
sector. Furthermore, it we
period of 1998-2004, is intriguing
find that differentiation in ROA, th
PBT, and CFO
Staples, Industrials andhas been consistent and increases over the
Telecommunic
tors which have period
scoredof 2006-2010. higher on onl
indices have significantly higher SG, RO
compared to Health Care
Sustainability - corporate and Materials
performance causal direction w
on two of the four indices, respectively.
a question: is a selective sustainable
There are different opinions about the interaction between deve
enough to achieveenvironmental
bottom-line performance, social performance,
results? and
since sustainable practices
financial reduce
performance. The empirical research has not w
increase reached at
efficiency, a consensus.
and According to Friedman
result in(1970)better
vices, the Consumer Staples,
social responsibility and
involves costs and therefore can Ind
advantaged compared
worsen firms' to other
performance. sectors.
Preston and O'Bannon (1997) H
results are less reliable
and Jensen (2001) due to
argue that social non-norm
responsibilities might
using constrain firms' value maximization
Kolmogorov-Smirnov Z and lead to poorer
test), and
metric Mann-Whitney
financial performance. It isU
vital totests were
establish the direction
robustness of results (see
of causality: whether Table
conscientious companies5).are more
Springer
Table 4 Results from the hyp
GICS sectors SG ROA
2006-2007 2006-2008 2006-2009 2006-2010 2006-2007 2006-2008 2006-2009 2006-2010
Consumer discretionary
rvalue -1.7630 -2.1360 -2.267 -2.0576 1.5650 2.3098 2.5865 2.7879
p value 0.0820° 0.0354b 0.0254" 0.0412" 0.1234 0.0232" 0.0112a 0.0060a

Consumer staples
/ value -2.2340 -3.2580 -3.9667 -3.9207 1.4685 1.3802 1.4440 1.6290
p value 0.0360" 0.0030a 0.0000a 0.0000a 0.1657 0.1820 0.1607 0.1120

Energy
»value 1.0102 1.0060 1.0201 1.0124 0.7546 0.9820 1.3435 1.0720
p value 0.3365 0.3290 0.3180 0.3211 0.4640 0.3403 0.1930 0.2956

Financials
/ value -1.9160 -2.2222 -2.4381 -2.4651 -0.8621 -0.5312 -0.9531 -0.9790

p value 0.0660a 0.0321" 0.0180" 0.0160" 0.3921 0.5970 0.3431 0.3291
Health care
/value -0.7850 -0.8780 -0.8800 -1.0945 -0.0270" 0.5631 1.0170 1.4520

p value 0.4450 0.3890 0.3865 0.2817 0.9789 0.5771 0.3150 0.1530
Industrials
/value 3.0605 4.0690 4.7167 4.7940 -1.6520 -1.7140 -1.6630 -1.7634

p value 0.0030a 0.0000a 0.0000a 0.0000a 0.1070 0.0921e 0.1092 0.0812
Information technology
/value -1.3378 -1.6465 -1.9509 -1.8666 -0.0370 -0.5556 -0.5243 -0.8032
p value 0.1923 0.1090 0.0570e 0.0645e 0.9713 0.5821 0.6053 0.4254
Materials
/value -1.5334 -1.6376 -1.7153 -1.9712 0.0321 07745 0.9203 1.1133
p value 0.1441 0.1131 0.0942e 0.0550e 0.9751 0.4442 0.3625 0.2716
Telecommunication
/value -3.0178 -3.7102 -4.5412 -4.9470 3.0699 3.5143 3.7130 3.6413

p value 0.0190a 0.0040a 0.0012a 0.0000a 0.0222" 0.0060a 0.0020" 0.0020a
Utilities
/value -1.5660 -1.7970 -1.7323 -1.5064 -0.4729 -1.4450 -1.5566 -1.4653
p value 0.1402 0.0865e 0.0945e 0.1423 0.6443 0.1632 0.1280 0.1523
GICS sectors PBT CFO
2006-2007 2006-2008 2006-2009 2006-2010 2006-2007 2006-2008 2006-2009 2006-2010
/value 2.110 2.8043 2.8167 3.1010 2.0213 2.3140 2.5760 2.7998
p value 0.0412" 0.0080a 0.0060a 0.0020a 0.0502" 0.0240" 0.0120" 0.0060a
Consumer staples
/ value 2.6580 3.0740 3.5730 3.6300 2.5730 3.1460 3.6470 3.6190
p value 0.0140" 0.0040a 0.0010a 0.0010a 0.0170" 0.0030a 0.0010a 0.0010a
Energy
/value 0.5004 0.6567 0.6330 0.4930 0.2943 0.3890 0.2660 0.2412
p value 0.6234 0.5176 0.5303 0.6356 0.7254 0.7000 0.7920 0.8102
Financials
/value 0.4851 -1.1361 -1.3609 -1.4592 1.9689 0.2990 -0.0982 -0.3360
p value 0.6302 0.2601 0.1780 0.1481 0.0561e 0.7661 0.9352 0.7381
Health care
/value 0.8679 1.0707 1.1474 1.1333 -0.9980 -0.9931 -0.9891 -0.9832
Ф Springer
Sustainability Practices and Corporate Financial Performance 7 1
Table 4 continued
2006-2007 2006-2008 2006-2009 2006-2010 2006-2007 2006-2008 2006-2009 2006-2010
p value 0.3986 0.2930 0.2580 0.2624 0.3412 0.3342 0.3333 0.3312

Industrials
rvalue 2.0000 2.0491 2.6666 2.6391 1.8624 2.2934 2.5152 2.7062
p value 0.0530" 0.0201b 0.0090a 0.0l02b 0.0720c 0.0262a 0.0140" 0.0080"

/value 1.0923 1.2756 1.1560 1.1821 1.0990 1.1851 1.2521 1.3421
p value 0.2821 0.2080 0.2521 0.2412 0.2809 0.2431 0.2125 0.1842

Materials
I value -0.5512 -1.5642 -1.2565 0.05 14b 0.9172 1.3782 1.8552 2.0962
p value 0.5890 0.8771 0.9000 0.9590 0.3392 0.1753 0.0680е 0.0403ь
Telecommunication services
/value 2.5460 3.0750 3.1245 3.1730 2.6940 3.4023 3.7509 3.7433
p value 0.0460" 0.0130" 0.0080" 0.0060" 0.0404" 0.0090" 0.0030" 0.0012"

Utilities
/value -1.4213 -1.9132 -2.2046 -2.2040 -0.7832 -1.1145 -1.1444 -1.5332
p value 0.1790 0.0670е 0.0345" 0.0340" 0.4450 0.2634 0.2615 0.1332
Summary of the results using independent sample / test
Hypothesis Hypotheses accepted for activity sector Hypotheses rejected for
HI Industrials only All other sectors except industrials

H2 Consumer discretionary, telecommunications All other sectors except consumer discretionary,
telecommunications
H3 Consumer discretionary, consumer staples, All other sectors except consumer discretionary,
industrials, telecommunications consumer staples, industrials, telecommunications
H4 Consumer discretionary, consumer staples, All other sectors except consumer discretionary,
industrials, telecommunications consumer staples, industrials, telecommunications
The performance variables are sales growth (SG) calculated as 5-year growth rate in sales/revenue; return on assets (ROA) calculated as pr
before tax (PBT), and cash flows from operating activities (CFO)
a 1% significance, b 5% significance, c 10% significance
CI2OO8
profitable, or is it that more financially successful compa- = Ф' + 02^^2006 + 03PBT2OO7 + V,V. (2)
nies are more conscientious? In order to answer the first
DI2008 = Ф' + 02PBT2OO6 + </>зРВТ2оо7 + vij. (3)
question, we used regression model whereby the values of
EI2OO8 = ф' + 02PBT2OO6 + <^3^^2007 + V/J, (4)
four indices CI, DI, EI, and ETI (hereafter independent
variables) were regressed on the profit before taxation in
ETI2008 = Ф' + Ф2РВТ2006 + Ф3РВТ2007 + Vij. (5)
year 2009 (hereafter dependent variable, PBT2009), for a
firm i in country j These equations (2-5) will test whether more finan-
cially successful companies are more conscientious
PBT2009 - a + ßiClij + /^DI i j + /?3Е1 i j + ß4KTlij +
[sustainable]?
(i)
The estimation results of Eq. 1 show that coefficient of
In order to answer the second question, we used a CI is significantly positive while coefficient of EI is sig-
distributed -lag model, using two lags of profit before nificantly negative (see Table 6, Panel A). These results do
taxation (PBT2007, PBT2oo8)to measure the lag effect of past not provide a stronger support to our conjecture that global
profitability on the four indices (CI, DI, EI, and ETI), organizations sustainability practices have significant
respectively. Scholtens (2008) has used a similar approach for positive impact on their profitability, as only focus on the
the US sample. In this way, our model would explain whether community practices increases the profitability. Further-
past financial performance has any effect on sustainability more, these results show that focus on the environmental
practice of the global companies in 2008 or not. responsibilities involves high costs and therefore it reduces
^ Springer
Table 5 Results of hypotheses te
GICS sectors SG ROA
2006-2007 2006-2008 2006-2009 2006-2010 2006-2007 2006-2008 2006-2009 2006-2010
U value 512.00* 1067.00Ť 1831.50* 2694.00* 331.00** 726.50** 1400.50** 2027.50**
p value 0.0780е 0.0460" 0.0330b 0.0720е 0.0160 0.0020* 0.0030* 0.0030*
Consumer staples
и value 42.50* 83.00* 133.50* 199.00* 66.000 161.50 296.00 371.50
p value 0.0310b 0.0010" 0.0000* 0.0000* 0.1507 0.1820 0.1380 0.1160
Energy
U value 22.00 68.00 131.00 151.00 45.00 103.00 187.00 245.00
p value 0.5833 0.4140 0.2245 0.3190 0.5540 0.3983 0.3190 0.3160

Financials
U value 451.00 984.00 1676.00 2120.00 440.00 1077.00 1904.00 2283.00
p value 0.7244 0.5040 0.2454 0.2453 0.1823 0.2340 0.1312 0.1070

Health care
U value 64.00 137.00 258.00 401.00 68.00 135.00 222.00 267.00
p value 0.6710 0.4433 0.5355 0.9499 0.8439 0.4050 0.1740 0.0920е

Industrials
U value 277.00** 607.00** 1081.00** 1468.00** 390.00 928.00 1655.00 2090.00

p value 0.0050* 0.0000* 0.0000* 0.0000* 0.3903 0.5187 0.4712 0.3444
U value 133.00 314.40 564.00 800.50 160.00 359.00 611.00 822.50
p value 0.3723 0.3879 0.3470е 0.4695е 0.9636 0.9241 0.6770 0.2944

Materials
U value 88.00 219.00 400.00 473.00 134.00 289.00 490.50 567.00
p value 0.1556 0.1809 0.1589 0.1324 0.9869 0.6830 0.3960 0.2356

T elecommunication
U value 21.00 45.00 78.00 121.00* 21.00** 45.00** 83.00** 114.00**

p value 0.0000* 0.0000* 0.0000* 0.0000* 0.0105b 0.0000* 0.0000* 0.0000*
Utilities
(/value 25.00 57.50 105.00 158.00 29.00 48.00 89.00 114.00
p value 0.5052 0.4102 0.4020 0.3809 0.7986 0.1789 0.1490 0.1380

2006-2007 2006-2008 2006-2009 2006-2010 2006-2007 2006-2008 2006-2009 2006-2010
и value 341.00** 739.00** 1421.00** 1933.00** 259.00** 625.00** 1162.00** 1659.00**
p value 0.0412b 0.0080* 0.0060* 0.0020* 0.0502" 0.0240" 0.0120" 0.0060*
Consumer staples
и value 39.00** 85.00** 151.00** 216.50** 38.00** 81.50** 140.50** 207.00**
p value 0.0060* 0.0010* 0.0000" 0.0000* 0.0050" 0.0000* 0.0000" 0.0000*
Energy
U value 25.00 57.00 102.00 116.00** 26.00 74.00 105.00 117.00**
p value 0.0214 0.0040 0.0010 0.0010 0.0254 0.0250 0.0010 0.0010
Financials
U value 465.00 1178.00 2181.00 2617.00 461.00 1648.00 2223.00 2732.00
p value 0.3112 0.7471 0.8968 0.7480 0.2879 0.9568 0.9265 0.9881

Health care
и value 40.00** 88.00** 156.00** 199.00** 50.00 123.00 211.00 261.00**
Ф Springer
Table 5 continued
2006-2007 2006-2008 2006-2009 2006-2010 2006-2007 2006-2008 2006-2009 2006-2010
p value 0.0680 0.0190 0.0060 0.0040 0.2190 0.2260 0.1123 0.0722e

Industrials
U value 216.00+t 532.00" 983.00" 1382.00" 233.00" 465.00" 937.00+t 1243.00"

p value 0.0000a 0.0000a 0.0000a 0.0000a 0.0010a 0.0000a 0.000a 0.0000a
U value 100.00 214.00 391.00 549.00" 98.00 225.00 381.00 582.00"
p value 0.0503e 0.0090a 0.0040a 0.0010a 0.0440a 0.0160a 0.0030a 0.0020a
Materiais
и value 101.00 213.00" 385.00" 449.00" 103.00 233.00 394.00" 465.00"

p value 0.1445 0.0360ь 0.0190a 0.0080a 0.1579 0.1533 0.0864e 0.0150b
Telecommunication services
и value 25.00" 54.00" 106.00" 147.00" 27.00" 57.00" 97.00" 135.00"

p value 0.0260" 0.0040b 0.0010a 0.0050a 0.0650ь 0.0120a 0.0010a 0.0002a
Utilities
{/value 23.00* 50.00* 94.00f 117.00* 24.00 54.00f 110.00 135.00*

p value 0.1460 0.0530e 0.0360b 0.0250ь 0.1730 0.0832е 0.1160 0.0502е
Summary of the results using independent sample t test
Hypothesis Hypotheses accepted for activity sector Hypotheses rejected for
HI Industrials only All other sectors except industrials

H2 Consumer discretionary, telecommunications All other sectors except consumer
discretionary, telecommunications
H3 Consumer discretionary, consumer staples, industrials, Information technology, utilities
energy, health care, materials, telecommunications
H4 Consumer discretionary, consumer staples, industrials, Energy, financiais, health care,

materials, telecommunications information technology, utilities
The performance variables are sales growth (SG) calculated as 5-year growth rate in sales/revenue; return on assets (ROA) calcu
before tax (PBT), and cash flows from operating activities (CFO)
f Mean rank for sample companies is lower than control companies
+t Mean rank for sample companies is higher than control companies
firms' profitability. The estimation results of Eqs. companies'

global 2-5 commitment to their ethical, environ-
show that past profitability has significant positive impact
mental, community, and diversity responsibilities. Our
only on the community and ethical responsibilities. Similar
findings show that global sustainable companies put more
findings have also been reported by Al-Tuwaijri et al. on the eco-centric issues compared to ethno-
emphasis
(2004). centric issues. Overall our statistical results confirm that
that companies which place emphasis on sustainability
practices have higher financial performance measured by
Conclusion return on assets, profit before taxation, and cash flow from
operations compared to those without such commitments in
This paper tests the hypothesis that companies with supe-
some activity sectors. Furthermore, our findings show that
rior sustainability practices have superior financial per-
the higher financial performance of sustainable companies
formance and growth than those companies which do has not increased and been sustained over the periods
place emphasis on sustainability. In this paper, first2006-2008,
we 2006-2009, and 2006-2010, respectively. We
examined the sustainability reports of the global sustain-
find that ROA, PBT, and CFO have consistently increased
able corporations and developed four indices reflecting
over the period 2006-2010. Despite limitation of sample
Springer
Table 6 Regression results

Panel A
Coefficients Constant CI DI EI ETI Adj. Ř2 N
Eq. 1: PBT2009 = a + ßiCl ¡j + ßiîj + ßîj + ÊTI,^ + £¡j

7.0351a 0.03 17b 0.0218 -0.0321е 0.0024 0.024 98
/value 12.3698 2.0466 1.5522 -2.5544 0.1811
p value 0.0000 0.0445 0.1252 0.0128 0.8568

Panel В
Coefficient Adj. R2 N
Eq. 2: CI2008 = 01 + Ф2РВТ2006 +

5.0628 -0.5881 2.9820е 0.0465 98
/value 0.5414 -0.4662 1.7550
p value 0.5896 0.6423 0.0829

Eq. 3: DI2008 = 0i + </>гРВТ2ооб + 0зРВТ2оо7 + v¡j
1.4195 -0.1720 2.9143 0.0312 98
/value 0.1518 -0.0322 1.2463
p value 0.8792 0.9342 0.2090

Eq. 4: EI2008 = Ф' + 02РВТ2ооб + 2007 + v¡j
4.4732 0.3441 3.4869 0.0342 98
/value 0.3914 0.1553 1.5436
p value 0.6964 0.8769 0.1265

Eq. 5: ETI2oo8 = + </>2РВТ2ооб + 0зРВТ2оо7 + v¡j
3.4620 -2.4832е 4.4405a 0.0243 98
/value 0.4439 -1.8420 3.0712
p value 0.6652 0.0690 0.0020
size and time period economies;

chosen we study,
for this argue that fu
overal
results provides to ascertain
reasonable the influence
evidence of
that, the
directional the
relationship companies'
between progress
corporate tow
sustain
practices corporatedeveloping
and economies. Sim
financial performance.
Despite investigate how not-for-pr
debates on the worthiness of investing a
tainable
poration's resources to becomedevelopment, wh
'more responsibl
investigate
eyes of the stakeholders, the sustainable
the findings indicate th
and most
strategies have been proven importantly,
as in the interestshow
of
ated
poration and therefore, since their
ultimately performan
in the best inte
shareholders, the legal owners.
those The
used in assessment
for-profit org
social impact of companies is a complex task; in th
Acknowledgments
we have mainly assessed We are th
corporate philanthrop
Institute, University Teknologi M
small number of diversity issues. These practices c
paper.
much of CSR activities these days and it is dif
ascertain, from ethno-centric point of view, what i
and/or optimal Appendix
corporate social 1: Items in the T
commitment?
propose that future research should develop 'othe
formance indicators Community
based on the Index (CI) com
multiple
perspectives to evaluate the impact of sustainable p
for for-profit 1 Does
organizations. the company
A major have
limitation a
of o
is that we focused only
so, on the
how top 100
much was global
given d
able companies which year?
are mostly from the de
& Springer
2 Does the company have exceptional or particularly

8 Does the company conduct diversity training for its
employees?
innovative charitable-giving programs?
3 Is the company an industry leader
9 Does thewith respect
company have a history ofto its in the
violations
area of abusive labor conditions?
performance in Community activism?
4 Does the company have exceptional volunteer
10 Does the company have a poor Equal Employment
programs? Opportunity Commission (EEOC) record?
5 Is there evidence of new initiatives implemented by or 1 1 Does the company's record in this area show a
awards given to the company with respect to its systematic or repeated disregard for the need to foster
performance in this category? an open and diverse work environment?
6 What community programs does the company have in 12 Does the company have affirmative action programs
place? pertaining to recruitment and promotion?
7 Does the company have employee volunteer programs? 13 Does the company, at a minimum, have in place
8 Do the company's volunteer programs involve a large specifically stated policies against discrimination in
portion of the company's current and former hiring and promotion based upon sexual orientation?
workforce?
14 Does the company have a set of standards for its
9 Does the company participate in public/private part- overseas operations and non-U.S. contractors and
nerships related to education, job training, or urban suppliers?
revitalization and if so, what is the nature of the 15 Does the company have a board or staff task force or
company's commitment to them? committee set up to address diversity-related issues?
10 Does the company have partnerships with local 16 Does the company clearly exclude women from
schools or community-based groups? positions in operating top management?
1 1 Does the company have a corporate giving program 17 Does the company have women and minorities
and if so, how much was given during the most recent serving in positions with substantial profit and loss
fiscal year? responsibilities?
12 Is the company committed to donating a given 18 Does the company have gender equity in wages?
percentage of its pretax profits to charitable organi- 19 How does the company portray woman in advertising
zations and if so, what percentage is the target goal? and marketing materials?
20 What is the nature and extent of any civil discrimi-
Diversity Index (DI) nation lawsuits brought against the company?
21 Does the company have an understanding of the need
1 Has the company demonstrated a commitment to for minority constituencies to have more of a voice in
business?
workforce diversity?
2 Does the company actively hire and promote minority
and women?
Environment Index (EI)
3 Has the company demonstrated its commitment to
diversity through strong representation of women, 1 Is the company in compliance with environmental
minorities, and the disabled on boards of directors, in
laws and regulations?
top management, and/or among the company's high- 2 What civil lawsuits, particularly those covering over-
est paid employees? seas issues, has the company been subject to, with
4 Has the company demonstrated its commitment to respect to its environmental performance in the past 3
diversity through its training and advancement pro- years?
grams (e.g., support networks, management reviews, 3 What assets have the company accrues for pollution
mentoring)? remediation?
5 Has the company demonstrated its commitment to 4 Does the company have environmental remediation
diversity through participation in women and minority liabilities?
vendor and banking programs? 5 Does the company have current substantial liabilities
6 Has the company demonstrated its commitment to for the remediation of asbestos?
diversity through implementation of innovative work/ 6 Is the company dedicated to the conservation of
life programs (e.g., flextime, job sharing, child care, energy and natural resources, with emphasis on the
elder care)? impact of operations on the local community?
7 Does the company have programs to train woman for 7 Is the company proactive in its environmental
advancement? efforts?
£) Springer
8 Has the company demon

5 Does the code include corporate policies dealing with
change, with respect
business conduct to
specifically related to commercial it
mance? bribery?
9 Has the company developed new products and/or 6 Does the code include corporate policies dealing with
processes that will reduce or minimize environmental business conduct specifically related to international
impact? business relationships?
10 Has the company adopted new technologies and/or 7 Does the code include corporate policies dealing with
redesigned products to conserve the use of energy, business conduct specifically related to use and public
water, materials, and/or land? disclosure of inside info, and the use of confidential
11 Is the company involved with the new development or and proprietary information?
use of clean energy, sustainable renewable energy, or 8 Does the code include corporate policies dealing with
natural foods? business conduct specifically related to export com-
12 Is the company perceived as an industry leader, with pliance and international economic sanctions?
respect to its performance in this category? 9 Does the code include corporate policies dealing with
13 What is the effectiveness of the company's environ- business conduct specifically related to political
mental policies; specifically, are the company's contributions?
established programs and/or goals actually improving 10 Does the code include corporate policies dealing with
its environmental performance? business conduct specifically related to antitrust and
14 Has the company taken positive steps toward pre- competition laws?
serving our environment? 1 1 Does the code include corporate policies dealing with
15 Does the company have environmental policies in business conduct specifically related to health, safety,
effect with measurable goals, companywide responsi- and environment?
bility, and quantitative accountability? 12 Does the code include corporate policies dealing with
16 Does the company have voluntary programs in place, business conduct specifically related to harassment?
including recycling? 13 Has the company, its executives, managers, and
17 Does the company have specific environmental pol- employees consistently operated within the frame-
icies and if so, what are they? work provided by the Code of Business Conduct in the
18 What are the company's major policies to prevent air past 3 years?
and water pollution?
19 Does the company have an environmental report,
including quantitative data on emissions/pollution?
Appendix 2: CSR Rating Agencies/Organization
What are the company's levels of emission? What are
the company's levels of environment data, e.g., TRI,
spills, etc.?
20 What are the company's recycling efforts?
S. no. Agency/Organization name Country
21 Are all company operations (including those abroad)
in compliance with environmental statutes? 1 Accountability Rating UK
22 What is the nature and amount of EPA violations and 2 Allianz Global Investors Germany/UK/France
fines paid? 3 Analistas Internacionales Spain
en Sostenibildad SA
4 Arese France
Ethical Index (ETI) 5 ASSET4 Switzerland
6 Avanzi SRI Research Italy

1 Does the co. have a written Code of Business Conduct
7 Bank Sarasin Co Ltd Switzerland
used as a guide to help employees live up to the8 BHF-Bank AG Germany
company's ethical standards? 9 Business Ethics USA
2 Does the code go beyond the legal minimums?
10 Business in the Community UK
3 Does the code include corporate policies dealing with (ВГГС)
business conduct specifically related to Equal1 1 Calvert Group Ltd USA
Employment Opportunity? 12 Centre for Australian Ethical Australia
4 Does the code include corporate policies dealing with Research (CAER)
business conduct specifically related to conflicts of 13 Centre Info SA Switzerland
interest?
& Springer
Appendix 2 conitnued Appendix 2 conitnued
S. no. Agency/Organization name Country S. no. Agency/Organization name Country
14 Citizens Advisers Ine USA 50 Pictet & Cie Switzerland
15 Co-op America USA 51 PIRIC UK
16 CoreRatings Ltd UK 52 Repu Tax Australia

17 Corporate Knights Canada 53 Safety & Environmental Risk UK
18 Corporate Monitor Australia Management (SERM)
19 Covalence SA Switzerland 54 Scoris GmBH Germany
20 Danish Governments Denmark 55 SiRi Company Switzerland
Pricewaterhouse Coopers 56 STOCK at STAKE Belgium
21 Dutch Sustainability Research The Netherlands 57 Sustainable Asset Management Switzerland
BV (DSR) (SAM) Group Holding AG
22 E.Capital Partners SPA Italy 58 Sustainable Investment Australia
23 Ecos Switzerland Research Institute (SIRIS)
Pty
24 Ethibel Belgium
59 Triodos The Netherlands
25 Ethical & Environmental UK
Screening Service (ESS) 60 UBS (Union Bank of Switzerland
Switzerland)
26 Ethical Consumer Research UK
61 Vente USA
Association (ECRA)
27 EthicFinance France 62 Vigeo France
28 Ethiscan Canada Ltd Canada 63 Vonix Austria
29 Foundation Ecologisy Spain 64 Westpac Investment Australia

Desarollo (EcoDes) Management Corporation
65 Zürcher Kantonalbank Switzerland
30 FTSE Group UK
31 Global Ethical Standard Sweden
Investment Services AB
(GES)
32 Global Risk Management UK
Services (GRM)
Appendix 3: Item-by-Item Analysis
33 Goldman Sachs Corporation USA
34 Imug Germany
Community Index (CI)
35 Imug/SECURVITA Germany
36 Innovest Group USA
Items Mean Std. N
37 Inrate Switzerland deviation
38 Institutional Shareholder USA
Services (ISS) 1 1 . Corporate giving program and amount 3.10 1.51 98
39 Jantzi Research Ine Canada given
40 Johannesburg Securities South Africa 10. Partnership with local Schools or 3.05 1.56 98
community-based groups
Exchange
41 KAYMEA Investment Israel 9. Public/private partnership 2.99 1.62 98
Research & Analysis 6. Community programs 2.85 1 .58 98
42 Kempen Capital Management/ UK/The Netherlands 7. Employee volunteer program 2.56 1 .72 98
SNS Bank
2. Exceptional and innovative charitable- 2.39 1 .58 98
43 Kynder Lydenberg & Domini UK giving programs
(KLD) Research & Analytics 8. Current and former workforce 2.14 1.72 98
44 Lombard Odier Darier Hentsch Switzerland volunteering (in percent)
& Chie
4. Exceptional volunteer program 1.92 1.61 98
45 MAALA Israel 1 . Contribution to charitable foundations 1 .52 1 .82 98
46 Name of the agency/ Country 3. Performance in community activism 1.42 1.72 98
organization 5. New initiative and awards received 1.31 1.82 98
47 Network for Social Switzerland
1 2. Commitment to donating 0.51 1.32 98
Responsibility Economy
48 O.D.E. France Note: 12 items were used to assess companies' disclosure related
community. The companies scored the highest for item 1 1 . T
49 Oekom Research AG Germany
companies scored the lowest on item 12
â Springer
Diversity Items Mean Std.

Index deviation
(DI)N
7. Use of confidential and proprietary 1.31 1.58 98

Items Mean Std. N information
deviation
8. Export compliance and international 1.28 1.66 98
economic sanctions
1 . Commitment to workforce diversity 2.74 1.68 98
9. Political contributions 1.15 1.49 98
12. Recruitment and promotion 2.50 1.77 98
10. Antitrust and competition laws 1.07 1.44 98
2. Hiring and promoting minority and 2.41 1.75 98
women
11. Health, safety and environment 1.01 1.48 98
12. Harassment 0.77 1.09 98
14. Standards for overseas operations 2.13 1.88 98
13. Operated within framework 0.6 0.88 98
6. Implementation of innovative work/life 1.91 1.88 98 of code of business conduct
programs
3. Representation of women and minorities 1.83 1.86 98 Note : 13 items were used assess companies' disclosure related to
13. Discrimination in hiring and promotion 1.48 1.85 98 ethical practices. The companies scored the highest for item 1 and the
lowest mean was for item 6
2 1 . Minorities constituents to have more of a 1 .39 1 .34 98
voice
7. Women's training for advancement 0.99 1.62 98

References
4. Training and advancement programs on 0.97 1 .6 98
diversity
Acciona. (2008). Acciona Sustainability Report.
15. Diversity-related issues 0.91 1.64 98 Accor. (2008). Accor Annual Report.
19. Women in advertising and marketing 0.74 0.88 98 Adam, C., & Zutshi, A. (2004). Corporate social responsibility: Why
materials business should act responsibly and be accountable. Australian
5. Participation in women and minority 0.72 1.38 98 Accounting Review , 14(3), 31-39.
programs Adidas. (2008). Adidas Sustainable Performance Review.
Al-Tuwaijri, S. A., Christensen, T. E., & Hughes, К. E. (2004). The
17. Women and minorities at position with 0.7 1.46 98
relations among environmental disclosure, environmental per-
substantial profit (loss)
formance, and economic performance: A simultaneous equations
8. Diversity training for employees 0.69 1 .43 98 approach. Accounting , Organizations and Society , 29, 447-471.
18. Gender equality in wages 0.14 0.7 98 Aras, G., & Crowther, D. (2008). Evaluating sustainability: Need for
standards. Issues in Social and Environmental Accounting, 2(1),
9. History of violations - abusive labor 0.05 0.41 98
19-35.
conditions
Bansal, P. (2005). Evolving sustainability: A longitudinal study of
16. Exclusion of women from top 0.04 0.24 98
corporate sustainable development. Strategic Management Jour-
management position nal , 26(3), 197-218.
20. Civil discrimination lawsuit against the 0.04 0.24 98 Barnett, M. L. (2007). Stakeholder influence capacity and the
company variability of financial returns to corporate social responsibility.
10. Equal employment opportunity 0.01 0.1 98 Academy of Management Review, 32 , 794-816.
Brown, M. T. (1990). Working ethics: Strategies for decision making and
11. Open work environment 0.01 0.1 98
organizational responsibility. San Francisco, CA: Jossey Bass.
Buchanan,related
Note : 21 items were used to assess companies' disclosure D., Fitzgerald,
to L., Ketley, D., Gollop, R., Jones, J. L.,
diversity. The companies scored the highest for item 1 Lamont,
and theS.lowest
S., et al. (2005). No going back: A review of the
for items 10 and 11, respectively literature on sustaining organizational change. International
Journal of Management Reviews, 7(3), 189-205.
Cacioppe, R., Forster, N., & Fox, M. (2007). A survey of managers'
perceptions of corporate ethics and social responsibility and
action that may affect companies' success. Journal of Business
Ethics , 82 , 681-700.
Environmental Index (EI) Carroll, A. B. (1979). A three-dimensional conceptual model of
corporate performance. Academy of Management Review, 4(A) ,
497-505.
De Vaus, D. A. (1986). Surveys in social research . London: Allen &
Items Mean Std. deviation N Unwin.
Diageo Pic. (2008). Diageo Corporate Citizenship Report.
1 . Written code of business conduct 2.78 1 .63 98 Dowling, G. R. (2001). Creating corporate reputations. Oxford:
Oxford University Press.
2. Beyond the legal minimums 2.54 1 .85 98
Epstein, M. J. (19%). Improving environmental accounting with full
3. Equal employment opportunity codes 2.16 1.74 98 environmental cost accounting. Environmental Quality Manage-
4. Conflict of interest 1 .64 1 .78 98 ment, Autumn , 1 1-22.
5. Commercial bribery 1.64 1.76 98 Epstein, M. J., & Roy, M. J. (2001). Sustainability in action:
Identifying and measuring key performance drivers. Long Range
6. International business relationships 1.36 1.64 98
Planning, 34 , 585-604.
Ф Springer
Fadul, J., Halliburton, R., & Maurer, R. A. M.,

Rimmer, (2004).
Macneil, Business ethics
J., Chenhall, R., Smith, K.,, & Watts, L. (1996).
corporate social responsibility, and firm Reinventing
value in competitiveness:
the oil and Achieving
gas best practices in Aus-
industry, SPE Annual Technical Conference tralia. South Melbourne:
and Pitman.
Exhibition,
26-29 September, Houston, Texas Roberts, W. P., & Dowling, R. G. (2002). Corporate reputation and
Fredrick, W. C. (2006). Corporations , be good! sustainedThe
superior
story
financial
ofperformance.
corporate Strategic Management
social responsibility. Indianapolis, IN: Dogear Journal, 23Publishing.
, 1077-1093.
Friedman, M. (1970). The social responsibility Robinson, J. (2004). of business
Squaring is to
the circle? Some thoughts on the idea of
increase its profits. New York Times Magazine sustainable development. Ecological Economics , 48(A), 369-384.
13, September
32-33. Rondinelli, D. A., & Berry, M. A. (2000). Environmental citizenship in
Gelb, D. S., & Strawser, J. A. (2001). Corporate social responsibility multinational corporations. Social responsibility and sustainable
and financial disclosure: An alternative explanation for increased development. European Management Journal , I8( 1 ), 70-84.
disclosure. Journal of Business Ethics, 33(1), 874-907. Schaltegger, S., & Synnestvedt, T. (2002). The link between 'green'
Godfrey, P. C. (2005). The relationship between corporate philan- and economic success: environmental management as the crucial
thropy and shareholder wealth: A risk management perspective. trigger between environmental and economic performance.
Academy of Management Review, 30 , 777-798. Journal of Environmental Management , 65, 339-346.
Schaltegger, S., & Wagner, M. (2006). Integrative management of
Gray, R. (2010). Is accounting for sustainability actually accounting
for sustainability and how would we know? An exploration of sustainable performance, measurement and reporting. Interna-
narratives of organizations and the planet. Accounting, Organi- tional Journal of Accounting. Auditing and Performance Eval-
zations and Society, 35, 47-62. uation, 3, 1-19.
Henri, J.-F., & Journeault, M. (2010). Eco-control: The influence Scholtens,
of B. (2008). A note on the interaction between corporate
management control systems on environmental and economic social responsibility and financial performance. Ecological
performance. Accounting Organization and Society, 35(1), 63-80. Economics, 68 , 46-55.
Intel. (2008). Intel Social Responsibility Report. Singh, K. R., Murty, H. R., Dikshit, A. K., & Gupta, S. K. (2009). An
Jensen, M. C. (2001). Value maximization, stakeholder theory, and overview of sustainability assessment methodologies. Ecological
the corporate objective function. Journal of Applied Corporate Indicators, 9(2), 189-212.
Finance, I4( 3), 8-21. Stone, B. A. (2001). Special-purpose taxonomy of corporate social
Kurucz, E., Colbert, В., & Wheeler, D. (2008). The business case for performance concepts. Accounting and the Public Interest, /, 42-73.
corporate social responsibility. In A. Crane, A. McWilliams, Sustainability-UNEP.
D. (1997). The 1997 Benchmark Survey: The
Matten, J. Moon, & D. Siegel (Eds.), The Oxford handbook of Third International Progress Report on Company Environmental
corporate social responsibility (pp. 83-112). Oxford: Oxford Reporting. Oxford: Oxford University Press.
University Press. Székely, F., & Knirsch, M. (2009). Responsible leadership and
Lee, D. D., Faff, R. W., & Smith, K. L. (2009). Reviving the vexing corporate social responsibility: Metrics for sustainable perfor-
question: Does superior corporate social performance lead to mance. European Management Journal, 23 , 628-647.
improved financial performance? Australian Journal of Man- Tenuta, P. (2010). The measurement of sustainability. Review of
agement, 34 , 21-49. Business Research, /0(2), 163-171.
Lopez, V. M., Garcia, A., & Rodriguez, L. (2007). Sustainable
Waddock, S. A., & Graves, S. B. (1997). The corporate social
development and corporate performance: A study based on the performance - financial performance link. Strategic Manage-
Dow Jones sustainability index. Journal of Business Ethics , 75, ment Journal, 18 , 303-319.
285-300. Wagner, M. (2007). Integration of environmental management with
McElhaney, K. A., Toffel, M. W., & Hass, N. (2005). Designing a other managerial functions of the firm: Empirical effects on
sustainability management system at BMW group: The Design- drivers of economic performance. Long Range Planning, 40 ,
works/USA case study. Greener Management International , 46 , 611-628.
103-116. Wagner, M. (201 1). Corporate performance implications of extended
McGuire, J. В., Sundgren, A., & Schneeweis, T. (1988). Corporate stakeholder management: New insights on mediation and
social responsibility and firm financial performance. Academy of moderation effects. Ecological Economics , 70(5), 942-950.
Management Journal, 3/(4), 854-872. Wagner, M., & Schaltegger, S. (2003). How does sustainability
Morhardt, J. E., Baird, S., & Freeman, K. (2002). Scoring corporate performance relate to and business competitiveness? Greener
environmental and sustainability reports using GRI 2000, ISO Management International, 44 , 5-16.
14301 and other criteria. Corporate Social and Environmental Wagner, M., & Schaltegger, S. (2004). The effect of corporate
Management Journal, 9, 215-233. environmental strategy choice and environmental performance
Nunnally, J. C. (1978). Psychometric theory . McGraw-Hill: New on competitiveness and economic performance. An empirical
York. analysis in EU manufacturing. European Management Journal ,
Patten, M. (2002). The relation between environmental performance 22(5), 557-572.
and environmental disclosure. Accounting, Organizations and Warhurst, A. (2002). Sustainability indicators and sustainability
Society, 27(8), 763-773. performance management. Report to the Project: Mining,
Patten, M. (2008). Does the market value corporate philanthropy? Minerals and Sustainable Development (MMSD), International
Evidence from the response to the 2004 tsunami relief effort. Institute for Environment and Development (IIED). Warwick,
Journal of Business Ethics, 81(3), 599-607. England, http://www.iied.org/mmsd/mmsd_pdfs/sustainability_
Pettigrew, A. M. (1985). The awakening Giant : Continuity and indicators.pdf.
change in ICI. Oxford: Blackwell. Wood, D. J. (1991). Corporate social performance revisited. Academy
Pivato, S., Misani, N., & Tencati, A. (2008). The impact of corporate of Management Review, /6(4), 691-718.
World Commission on Environment, Development. (1987). Our
social responsibility on consumer trust: The case of organic food.
Business Ethics : A European Review, 17 , 3-12. common future. Oxford: Oxford University Press.
Preston, L. E., & O'Bannon, D. P. (1997). 'The corporate social-
financial performance relationship: A typology and analysis.
Business and Society, 36 , 419-429.
Springer

Ameer Othman 2012 JBE Sustainability Practices and Corporate Finance

Încărcat de

Informații document

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Ameer Othman 2012 JBE Sustainability Practices and Corporate Finance

Încărcat de

Drepturi de autor:

Formate disponibile

Sustainability Practices and Corporate Financial Performance: A Study Based on the Top

Sustainability Practices and Corporate Financial Performance:

which (McGuire et al. 1988).

purpose of environmental regulations is to that

Table 1 Sample distribution

8. Sustainability Composite score of whether there is a Spain 3

Value (ESV) and environ

and employees, regardless of same

approach to assess the sustainable development commit-

Belgium 1 24.00 15.00 46.00 12.00

Finland 6 11.67 13.66 47.17 11.33

Germany 6 20.17 18.67 40.17 11.17

Spain 3 22.00 24.67 45.33 39.00

including underlie the current

Table 3 Sustainability CI DI EI ETI

Healthcare 28.17 23.59 42.50 18.50

Information technology 27.56 18.76 45.67 20.88

Table 4 Results from the hyp

GICS sectors SG ROA

2006-2007 2006-2008 2006-2009 2006-2010 2006-2007 2006-2008 2006-2009 2006-2010

p value 0.0820° 0.0354b 0.0254" 0.0412" 0.1234 0.0232" 0.0112a 0.0060a

p value 0.0360" 0.0030a 0.0000a 0.0000a 0.1657 0.1820 0.1607 0.1120

p value 0.3365 0.3290 0.3180 0.3211 0.4640 0.3403 0.1930 0.2956

/ value -1.9160 -2.2222 -2.4381 -2.4651 -0.8621 -0.5312 -0.9531 -0.9790

/value -0.7850 -0.8780 -0.8800 -1.0945 -0.0270" 0.5631 1.0170 1.4520

/value 3.0605 4.0690 4.7167 4.7940 -1.6520 -1.7140 -1.6630 -1.7634

/value -3.0178 -3.7102 -4.5412 -4.9470 3.0699 3.5143 3.7130 3.6413

2006-2007 2006-2008 2006-2009 2006-2010 2006-2007 2006-2008 2006-2009 2006-2010

/value 0.8679 1.0707 1.1474 1.1333 -0.9980 -0.9931 -0.9891 -0.9832

GICS sectors PBT CFO

2006-2007 2006-2008 2006-2009 2006-2010 2006-2007 2006-2008 2006-2009 2006-2010

p value 0.3986 0.2930 0.2580 0.2624 0.3412 0.3342 0.3333 0.3312

rvalue 2.0000 2.0491 2.6666 2.6391 1.8624 2.2934 2.5152 2.7062

p value 0.0530" 0.0201b 0.0090a 0.0l02b 0.0720c 0.0262a 0.0140" 0.0080"

p value 0.2821 0.2080 0.2521 0.2412 0.2809 0.2431 0.2125 0.1842

/value 2.5460 3.0750 3.1245 3.1730 2.6940 3.4023 3.7509 3.7433

p value 0.0460" 0.0130" 0.0080" 0.0060" 0.0404" 0.0090" 0.0030" 0.0012"

/value -1.4213 -1.9132 -2.2046 -2.2040 -0.7832 -1.1145 -1.1444 -1.5332

p value 0.1790 0.0670е 0.0345" 0.0340" 0.4450 0.2634 0.2615 0.1332

Summary of the results using independent sample / test

Hypothesis Hypotheses accepted for activity sector Hypotheses rejected for

HI Industrials only All other sectors except industrials

Table 5 Results of hypotheses te

GICS sectors SG ROA

2006-2007 2006-2008 2006-2009 2006-2010 2006-2007 2006-2008 2006-2009 2006-2010

p value 0.5833 0.4140 0.2245 0.3190 0.5540 0.3983 0.3190 0.3160

U value 451.00 984.00 1676.00 2120.00 440.00 1077.00 1904.00 2283.00

p value 0.7244 0.5040 0.2454 0.2453 0.1823 0.2340 0.1312 0.1070

U value 64.00 137.00 258.00 401.00 68.00 135.00 222.00 267.00

p value 0.6710 0.4433 0.5355 0.9499 0.8439 0.4050 0.1740 0.0920е

U value 277.00** 607.00** 1081.00** 1468.00** 390.00 928.00 1655.00 2090.00

p value 0.3723 0.3879 0.3470е 0.4695е 0.9636 0.9241 0.6770 0.2944

U value 88.00 219.00 400.00 473.00 134.00 289.00 490.50 567.00

p value 0.1556 0.1809 0.1589 0.1324 0.9869 0.6830 0.3960 0.2356

U value 21.00 45.00 78.00 121.00* 21.00** 45.00** 83.00** 114.00**

(/value 25.00 57.50 105.00 158.00 29.00 48.00 89.00 114.00

p value 0.5052 0.4102 0.4020 0.3809 0.7986 0.1789 0.1490 0.1380

2006-2007 2006-2008 2006-2009 2006-2010 2006-2007 2006-2008 2006-2009 2006-2010

U value 465.00 1178.00 2181.00 2617.00 461.00 1648.00 2223.00 2732.00

p value 0.3112 0.7471 0.8968 0.7480 0.2879 0.9568 0.9265 0.9881

и value 40.00** 88.00** 156.00** 199.00** 50.00 123.00 211.00 261.00**

GICS sectors PBT CFO

2006-2007 2006-2008 2006-2009 2006-2010 2006-2007 2006-2008 2006-2009 2006-2010

p value 0.0680 0.0190 0.0060 0.0040 0.2190 0.2260 0.1123 0.0722e

U value 277.00 607.00 1081.00 1468.00 390.00 928.00 1655.00 2090.00

U value 21.00 45.00 78.00 121.00* 21.00 45.00 83.00 114.00

и value 40.00 88.00 156.00 199.00 50.00 123.00 211.00 261.00**