Author
Erol, Işıl, Unal, U., Coskun, Y.
Publication Date
2023-06-28
Publication Place
-
Springer
Subject
Corporate social performance, ESG investing, PVAR Granger causality test, REITs, Stakeholder theory of corporation, Trade-off hypothesis
Type
Periodical
Language
English
Digital
Yes
Manuscript
No
Library
Özyeğin University
Library Asset ID
0944-1344
Record ID
828b12f0-54f0-41c1-9ea4-20d557b4044d
Library Location
International Finance
Date
2023-06-28
Sample Text
This study investigates the empirical link between the social and financial performance of the Real Estate Investment Trusts (REITs) by utilizing the PVAR-Granger causality model and a fixed-effects panel data model with a rich dataset comprising 234 ESG-rated REITs across five developed economies from 2003 to 2019. The results suggest that investors pay attention to individual E/S/G metrics and price each component of ESG investing differently, with E-investing and S-investing practices being the significant financial performance factors of REITs. This study is the first attempt to test the social impact and risk mitigation hypotheses of the stakeholder theory of the corporation and the neoclassic trade-off argument to explore the association between corporate social responsibility and the market valuation of REITs. The full sample results strongly support the trade-off hypothesis, indicating that REITs’ environmental policies involve high financial costs that may drain off capital and lead to decreasing market returns. On the contrary, investors have attached a higher value to S-investing performance, especially in the post-GFC period from 2011 to 2019. A positive premium for S-investing supports the stakeholder theory as the social impact could be monetarized into a higher return and a lower systematic risk and give rise to a competitive advantage.
DOI
10.1007/s11356-023-28376-1
Cilt
30
