The paper focuses on the role of life cycle sustainability of goods and services on the financial performance of the company. This paper peculiarly centres on the top 100 listed companies in India on Bombay Stock Exchange. Jose and Lee (2007) state that regulatory authorities are putting pressure on corporations to become responsible for environment. In 2011, Ministry of Corporate Affairs of India gave National Voluntary Guidelines on the issues regarding environment, society and governance. Security Exchange Board of India made mandatory for top 100 listed companies to report sustainability in Business Responsibility Report in their annual reports in the prescribed format. One of the principles, i.e., life cycle sustainability principles present in Business Responsibility Report has been studied in this paper. We test whether practising life cycle sustainability practices affects the financial performance of the company. Supply chain has been evaluated with the help of sustainable procedures to deal with pre-operation activities, operation activities, post-operation activities and activities related to society. Journal of Supply Chain Management System 7 (4) 2018, 14-19
An Impact of Life Cycle Sustainability on the Shareholder Value of a Firm: An Analysis of Interaction Effects 15 Review of Literature Plethora of regression-based research has been conducted to determine the role of sustainability on financial performance. As regard the sustainability some researchers say either it has positive influence on firm performance (Dowell, Hart, & Yeung, 2000; King & Lenox, 2001; Konar & Cohen, 2001; Lo & Sheu, 2007; Wagner, 2010) or it has negative influence on firm performance in the first few years (López, Garcia, & Rodriguez, 2007). Generally regression-based studies include multivariate analysis of multiple independent variables and one dependent variable. Regression analysis not only enables us to access the variance explained by the independent variables but also helps to analyse the interaction effect of explanatory variables and control variables on dependent variable. In relation to this paper Tobin’s q has been used as dependent variable. The papers of particular relevance that have used Tobin’s q have been reviewed in context to this paper. In the first study Konar and Cohen (2001) examine the extent to which environmental performance is valued in the market. Based upon sample size of 321 firms from S&P 500 for the year 1989, using Tobin’s q as dependent variable and Toxic Release Inventory (TRI) as independent variable. They found that by controlling other explanatory variables like R&D expenditure, industry concentration, market share, firm growth rates, firm size and advertising expenditure; there is negative impact of low environmental performance on Tobin’s q. All the control variables expect firm size are positively related to Tobin’s q. Thus it is concluded that low environmental performance has negative impact on value of the firm in market, i.e., low environmental performance means lower value of the firm. A reduction of 10% in TRI, increases
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- Summer '20
- Dr joseph