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- How Does the Market Value Corporate Sustainability Performance?Publication . Lourenço, Isabel C.; Castelo Branco, Manuel; Curto, José Dias; Eugénio, TeresaThis study provides empirical evidence on how corporate sustainability performance (CSP), as proxied by membership of the Dow Jones Sustainability Index, is reflected in the market value of equity. Using a theoretical framework combining stakeholder theory and resource-based perspectives, we develop a set of hypotheses that relate the market value of equity to CSP. For a sample of North American firms, our preliminary results show that CSP has significant explanatory power for stock prices over the traditional summary accounting measures such as earnings and book value of equity. However, further analyses suggest that we should not focus on corporate sustainability itself. Our findings suggest that what investors really do is to undervalue large profitable firms with low level of CSP. Firms with incentives to develop a high level of CSP not engaging on such strategy are, thus, penalized by the market.
- Sustainability strategies of the company TimorL: extending the applicability of legitimacy theoryPublication . Eugénio, Teresa; Lourenço, Isabel C.; Morais, Ana I.Purpose: this study aims to identify the legitimacy strategies employed by one of the largest Portuguese cement companies to defend and downplay its sustainability performance and activities related to two major controversies involving the company: co-incineration and the location of the Outão plant. Design/methodology/approach: a single case study methodology is employed for the empirical research. Sustainability reports were analysed in order to identify TimorL's sustainability disclosure practices, and semi-structured interviews were conducted to complement the case analysis. This paper emphasises legitimacy theory and legitimacy repair strategies that were identified by Suchman. Findings: legitimacy strategies, including “don't panic”; “create monitors”; “Justify”; “disassociate” and “explain”, were identified in the actions TimorL took after the above- mentioned controversies. The company initiated a series of actions to respond to the company's “crisis”. The conclusions of the study support the argument that sustainability strategies remain a powerful legitimacy tool. Originality/value: the paper adds to the scarce research available on the sustainability disclosure and practices of companies by providing new empirical data. It contributes to a better understanding of how companies behave when they are faced with legitimacy gaps and how they act to restore their legitimacy.
- The impact of media pressure on corporate sustainability in the cement industry: a Portuguese case studyPublication . Eugénio, Teresa; Lourenço, Isabel C.; Morais, Ana I.; Castelo Branco, ManuelIn this study we examine the sustainability reporting practices and sustainability strategies of a leading Portuguese cement company. The Portuguese cement industry had to deal since 1997 with scrutiny and pressure because of its involvement in co-incineration of hazardous industrial waste. Grounded on a lens of analysis combining legitimacy theory and media agenda-setting theory and based on a content analysis of sustainability reports and semi-structured interviews, we analyse the strategies used by the company to deal with said scrutiny and pressure and present its sustainability performance. Media pressure does seem to have impacted sustainability reporting and sustainability strategies as tools for the company to restore its legitimacy. Findings generally suggest that strategies of communication designed to legitimate the company actions were used. In particular, we suggest that the company managed its legitimacy by using simultaneously two sustainability reporting strategies: one of image enhancement and other of avoidance of threatening topics.
- Recent developments in social and environmental accounting researchPublication . Eugénio, Teresa; Lourenço, Isabel C.; Morais, Ana I.Purpose – The last years have witnessed a growth in interest in social and environmental questions. Many companies have developed environmental management and auditing systems and altered their social and environmental disclosure practices. These developments resulted in the growth of research focusing on the analysis of information disclosed by companies. The purpose of this study is to contribute a reflection on the papers that have been published on social and environmental accounting from 2000 to 2006. Design/methodology/approach – A literature review of the papers examining social and environmental matters published in selected accounting journals allows the identification of the key content issues, methodologies and research questions which have been predominant in the social environmental accounting research (SEAR) area. It also enables one to pin-point areas for future research. Findings – The content was examined and classified in four groups: social and environmental accounting systems; social and environmental disclosures; regulation impact; and relations among environmental disclosure and environmental performance. For each group, the research method; data origins and type of data; industry and country were identified. Almost all the studies are based on content analysis and interviews. Data are collected not only from the financial statements but also from other types of information disclosed by companies. In many cases, industry activities are selected carefully and most of the studies used data from the UK, Australia, and the USA. Originality/value – The paper provides a contribution to the development of the SEAR area, exploring different views. It also helps schools to identify areas for future research.