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

See all articles by Zhanbing Xiao

Zhanbing Xiao

Harvard University

Xin Zheng

University of British Columbia

Yuxiang Zheng

University of Akron - The George W. Daverio School of Accountancy

Date Written: June 1, 2023

Abstract

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

Xiao, Zhanbing and Zheng, Xin and Zheng, Yuxiang, The Economic and Financial Impact of Negative Environmental and Social Practices: Evidence from Consumers Store Visits (June 1, 2023). Available at SSRN: https://ssrn.com/abstract=4475050 or http://dx.doi.org/10.2139/ssrn.4475050

Zhanbing Xiao

Harvard University ( email )

Cambridge, MA
United States

HOME PAGE: http://www.zhanbingxiao.com

Xin Zheng (Contact Author)

University of British Columbia ( email )

2053 Main Mall
Vancouver, B.C. V6T 1Z2
Canada

Yuxiang Zheng

University of Akron - The George W. Daverio School of Accountancy ( email )

United States

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