Work

Reputational Risk: An Investigation Into How Environmental Failures Drive Stock Price Crashes

Year: 2025

Type: article

Abstract: ABSTRACT The study examines the relationship between stock price crashes and firm environment reputational risk. Using a large sample of US listed firms, covering a time span from 2007 to 2021, we test the effect of environmental reputation risk on three measures for the stock price crash risk (NEGCSK, DRUV, and CRASH). The findings reveal a strong positive relationship between stock price crash risk and environmental reputation risk. The relationship is more pronounced in firms with weaker governance, less concentrated industries, and subject to corporate cultures that lack innovation. The study contributes to the literature linking corporate environmental approach or strategy and financial markets, emphasizing the importance of green reputation in firms' strategy to protect shareholder value and to promote long‐term sustainability.

Source: Business Strategy and the Environment

DOI: 10.1002/bse.70466

Authors: Man Dang, Premkanth Puwanenthiren, Edward Jones, Hoang Long Phan, Abdelhafid Benamraoui

Institutions: University of Da Nang, Da Nang University of Economics, University of Westminster, Heriot-Watt University

Language: English

Topic: Corporate Identity and Reputation

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $4,480

Funder: National Foundation for Science and Technology Development