Sustainability and firm value in the oil and gas industry—A vicious circle?

The relationship between sustainability (or CSR) and company value has been intensively researched in recent times. However, the specifics of individual industries have not been sufficiently taken into account. Our study aims to fill this research gap. We focus on the oil and gas industry as a parti...

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Bibliographic Details
Published in:Corporate social-responsibility and environmental management 2023-05, Vol.30 (3), p.1129-1144
Main Authors: Kaupke, Katharina, zu Knyphausen‐Aufseß, Dodo
Format: Article
Language:English
Subjects:
3SLS
corporate social responsibility
Economics
firm value
Oil and gas industry
Profitability
Renewable energy
Simultaneous equations
Sustainability
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Summary:The relationship between sustainability (or CSR) and company value has been intensively researched in recent times. However, the specifics of individual industries have not been sufficiently taken into account. Our study aims to fill this research gap. We focus on the oil and gas industry as a particularly powerful and controversial industry. Based on legitimacy theory and institutional theory, we argue that the relationship between firm value and sustainability is negative in this industry. Our sample consists of 205 firms with 1515 observations. Using a simultaneous equation system (3SLS) to determine its direction, we find the two to be negatively interrelated in a vicious circle. Furthermore, we find evidence for a moderating role of the renewable energy share of a company's headquarter country as well as the company's industry segment. The explanatory power continues to hold with consideration of a profitability measure (Return on Sales) instead of firm value.
ISSN:1535-3966
1535-3958
1535-3966
DOI:10.1002/csr.2409