Page 39 - CITN 2017 Journal

ENVIRONMENTAL PERFORMANCE

INFORMATION OF UNITED

KINGDOM (UK) FIRMS AND SHARE

PRICE BEHAVIOUR ON THE

LONDON STOCK EXCHANGE:

AN EMPIRICAL ANALYSIS

By

Bisola Grace JOLOKO
Department of Accounting & Finance Caleb University, Lagos
Email: bisolajoloko@ymail.com

ABSTRACT

The study investigated the relevance of environmental performance information to share
price behavior of the UK FTSE 100 companies during the period 2009 to 2013. Drawing
on environmental disclosure literature and value relevance literature of financial and non-
financial information; the study established a link between financial variables (book value
and earnings) and proxy for non-financial information (environmental performance) to
explain the share price behaviour. The study used a sample of 94 companies over five years
and data were analysed using multiple regression analysis based on Olhson (1995)
valuation model. The results of the study showed that financial variables provided
relevant information to investors as anticipated; however, the tests of relevance of
environmental performance information to share prices behavior were statistically
insignificant. Cross sectional differences between industry types were also found in the
results. Thus, the conclusion is that environmental performance information is not relevant
to share price behaviour and environmental performance does not lead to improvement in
share price performance. The results were consistent with the cost concerned school that
environmental performance is a waste of resources that negatively affects share value. The
study mulls significant contribution to empirical findings on relevance of environmental
performance of companies to investors.

Keywords: Environmental performance, environmental disclosure, share price,
financial performance

JEL CLASSIFICATION: G11 M40 M48

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