Research on Impact of Listed Companies Sustainable Development on Company’s Value

Abstract

Abstract. Sustainable development is not only hardly measurable phenomenon, but it is also quite a challenge to determine its impact on the company's activities and the results. The scientific literature presents lot of areas reflecting sustainable development, but there is no definite opinion how to quantify the impact of sustainable development for listed companies' value. Proper assessment of sustainable development is particularly important in order to represent the company and to attract new investors. The purpose of this paper is to evaluate what kind of impact sustainable development has on the value of listed companies. According to the results of scientific literature, two hypotheses were proposed: (H1) Sustainable development of listed company has an impact on the company's weighted average capital costs, and it has a reflection in company's value. (H2) The results of sustainable development activities are seen in indices of company's value assessment. The hypotheses were verified by evaluating companies which are listed in NASDAQ OMX BALTIC stock exchange and participate in UN Global Compact. The research shows different results for both hypotheses, H1 could be approved and only two of the three companies of H2 results confirmed the hypothesis.Keywords: sustainable development, value of listed company, economic value added, the ratio of enterprise value and earnings before interest, tax, depreciation and amortization, return on equity, weighted average cost of capital.JEL Classification: G31, Q01.Conference topic: Contemporary Financial Management. IntroductionThe reasons why business units implement ideology of sustainable development in its activities are different. Some strive to maintain their value in the market, while others try to raise their competitiveness, others prefer to take care about social and environmental media and by invoking the resources of economic medium pursue an ideology of sustainable development. However, it should be noted that sustainable development is not only hardly tangible, measurable phenomenon, but it is also quite a challenge to determine its impact on the company's activities and the results.There are a number of alternative methods and indices for value assessment, but a problem arises when the method should be chosen for the company in which the concept of sustainable business is actively developed. The scientific literature presents lot of areas reflecting sustainable development, but there is no definite opinion how to quantify the impact of sustainable development for listed companies' value.Lithuanian experience shows that business units are still reluctant to provide reports of sustainable development. This situation leads to the fact that this area has not been regulated by any legislation so far, and only based on voluntary initiatives. Also exist the fact that business units, which implement sustainable development perhaps would like to provide reports of sustainable development, however they do not always know how to measure sustainable development acti...

Research on High-Quality Development Evaluation System of Listed Companies in the Power Industry Held by Central Enterprises Based on Comprehensive Empowerment-TOPSIS Method

“…In Western countries, "high-quality development" of enterprises is often closely related to "sustainable development". Lapinskaite I, Miecinskiene A and Michejeva A [4] consider that the companies involved in sustainable development will increase the company's value by improving operating efficiency, competing in both Lithuanian and international markets and contributing to improving people's quality of life.…”