Assessing the impact of sustainability-related misconduct on the buying firm´s stock performance

Abstract

This study investigates whether supply chain sustainability risks, which manifest whenever a buying firm is held accountable for the irresponsible behaviour of its suppliers, subsequently affect the financial performance of the buyer. Utilizing event study methodology on a secondary dataset of 392 firms and 2,814 media announcements, we provide evidence that suppliers’ environmental, social, and governance misconducts cause negative stock price reactions for the buying firms. We find that negative abnormal stock returns are higher for SCSR announced by more powerful media outlets and SCSR associated with firms operating in countries and industries where sustainable behaviour is not expected.

Co-authors: Ivana Mateska (ETH Zurich), Andrew P. Kach (Willamette University) und Stephan M. Wagner (ETH Zurich)

Biography

Prof. Dr. Christian Busse is a Full Professor and holds the Chair for Sustainable Production Management at the Carl von Ossietzky University since 2017. He completed his Habilitation at ETH Zurich in 2016, entitled Perspectives on the Management of Sustainability in Global Supply Chains. He received his Ph.D. from WHU – Otto Beisheim School of Management, Germany in 2010 (graded “summa cum laude”) and holds a master's degree in industrial engineering and management from the Technical University of Berlin that was granted in 2002 (with highest distinction). From 2010 to 2013, Prof. Busse was the responsible project manager for a major research project on sustainable supply chain management at EBS University for Business and Law in Wiesbaden, Germany. Prior to pursuing his Ph.D., he worked as a management consultant for The Boston Consulting Group in Düsseldorf, Germany.

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