The Economic and Financial Impact of Negative Environmental and Social Practices: Evidence from Consumers Store Visits
68 Pages Posted: 12 Jun 2023 Last revised: 15 Jun 2023
Date Written: June 1, 2023
Using daily foot-traffic data, we find a significant decrease in firms’ store visits following negative environmental and social (E&S) incidents. The decrease in visits by more E&S-conscious consumers is four times greater than that by less E&S-conscious consumers. Our results are stronger when the incidents are severe; populations are more educated and younger; firms have high E&S ratings and large advertising expenditures; and local product markets are more competitive. Lastly, we find that following E&S incidents, firm sales drop twice as much in more E&S-conscious areas. Our findings suggest that E&S practices can affect firm value via consumers shopping behavior.
Keywords: Environmental and Social Practices, Store Visits, Firm Value
JEL Classification: D12, G30, M14
Suggested Citation: Suggested Citation