Eco-Efficiency and Stock Market Volatility: Emerging Markets Analysis

• Main Authors: Alicia Fernanda Galindo-Manrique, Esteban Pérez-Calderón, Martha del Pilar Rodríguez-García
• Format: Article
• Language: English
• Published: MDPI AG 2021-04-01
• Series: Administrative Sciences
• Subjects: volatility; eco-efficiency; financial performance; emerging markets; panel data
• Online Access: https://www.mdpi.com/2076-3387/11/2/36

Climate change, the accelerated industrialization of emerging countries, as well as the growing demand for transparency from stakeholders, are all factors that influence the environmental performance of companies. Thus, eco-efficient behavior can improve financial performance by increasing wealth generation and decreasing the volatility of listed financial assets. There is a lot of previous literature showing diverse results of the effect of eco-efficiency on corporate profitability, but this is not the case when we refer to risk. This study analyzes the relationship between eco-efficient behavior and the share price volatility of companies traded in emerging markets. For this purpose, a sample of 346 companies listed in 24 countries was studied for the period between 2010 and 2017. The results show a positive effect. Thus, the recommendation is that a clear commitment to eco-efficient investment can improve the environmental impact of companies, from the private, public, and institutional spheres.