The value of a ‘just’ firm
Abstract
Purpose
The study aims to investigate market reactions associated with the JUST 100 rankings published by JUST Capital, a non-profit organization, as well as differences in financial reporting quality and performance between selected firms and their industry peers.
Design/methodology/approach
This study uses a sample of 431 firms selected as the 100 America’s Most Just Companies between 2016 and 2020 by JUST Capital. This study performs both an event study to determine whether the rankings are useful to investors and cross-sectional regression analyses on the characteristics of selected firms compared to their peers.
Findings
This study finds that investors react positively to selected firms around the time of the release of the JUST 100 rankings, suggesting that the rankings are decision-useful. This study also finds that selected firms exhibit higher accounting quality and financial performance than their peers.
Research limitations/implications
Rankings may not be free from bias because of JUST Capital’s ownership of an exchange-traded fund.
Social implications
The findings validate the rankings as well as the methodology used by JUST Capital, as they show market participants value firms that engage in socially responsible actions through their commitment to positively impact five key stakeholder groups: employees, customers, communities, environment and shareholders.
Originality/value
To the best of the authors’ knowledge, this is the first study that shows the importance of the JUST 100 rankings for investment decisions. Considering the growing push for companies to disclose environmental, social and governance (ESG) activities, this study provides evidence to support ESG disclosure regulations.
Keywords
Acknowledgements
The authors appreciate helpful comments from Nawazish Mirza (Editor) and two anonymous reviewers. The authors also thank Chinwen Hsin (discussant), participants at the 2023 Financial Management Association Meeting, an anonymous reviewer at the 2023 American Accounting Association Conference, Lawrence Chui, Larry Davis, Yu Gao, Stephanie Grimm, Ray J. Pfeiffer, Jr., Frederick (Bill) Rankin, Scott Seavey and Harry Turtle for their valuable comments. The authors thank Tyler Ricco for his research assistance. The authors are grateful to JUST Capital for making the JUST 100 rankings available to researchers and Lorraine Wilson (Managing Director, Investment Products, JUST Capital) for the interview. Data is available from the sources cited in the manuscript.
Citation
Desir, R., Ryan, P.A. and Albert, L. (2024), "The value of a ‘just’ firm", Review of Accounting and Finance, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/RAF-04-2023-0120
Publisher
:Emerald Publishing Limited
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