How Do Investors Value Firms' Decisions on Obtaining an Eco-label? Evidence from the Fishing Industry

Abstract

In a context of a pressing need for more sustainable practices, the fishing industry still has doubts about whether the benefits resulting from adopting them outweigh the associated costs. With the aim of providing insights to answer that question, this study presents an analysis of the "it pays to be green" hypothesis by measuring the stock market reaction to the public announcements of compliance with voluntary environmental standards. To this end, an event study has been carried out to investigate whether the announcement that a seafood company has been certificated by the Marine Stewardship Council Chain of Custody Standard influences its shareholders' decisions and, therefore, the company's market value. Results show positive average abnormal returns following that event; these returns are greater in the case of those companies with larger size or lower profitability.