Do investors react to environmental friendly news? An analysis for Spanish capital market

Abstract

This work adds to the recent debate in corporate social responsibility (CSR) and its effects on performance and firm value. By analysing Spanish companies participating in the IBEX-35 stock- exchange index, this paper empirically tests whether there is a significant price reaction to environmental friendly announcements. Using event studies methodology, the distinction among sectors allows for a better understanding of investors reaction. Results show first, that investors do act in response to this kind of practices and second, that the sign of their reaction depends crucially on the business of the firm and the sector where it operates. In this sense, results may help in reconciling the opposite views regarding the effects of CSR policies.