Impacts of Financial and Sustainability Measures on Shareholder Value Added based on Resource-based View and Modern Organisational Performance Theories: An Econometric Analysis

Abstract

This empirical study investigates the most important financial and sustainability performance measures that contribute to shareholder value added (SVA). We employ econometric modelling, with a particular emphasis on simultaneous equation system analysis. We carefully selected resources from the resource-based view (RBV) to identify the capabilities to define the main variables for S&P 500 companies. To obtain consistent and efficient estimates, we employ a seemingly unrelated regression (SURE) method. For each equation in the system, we use a causality framework that includes tests for stationarity, cointegration, and causality. Additionally, we estimate an error-correction model and a cointegration regression to identify long-run relationships. Our sample covers 503 companies in the Standard & Poor’s index over 20 years (2005-2024). We used Stata 19.5 and EViews 12 to conduct the econometric analysis.

First, our analysis provides evidence that the three main resources of the resource-based view theory are key to shareholder value added, and that the chosen variables (capabilities) are significant. Second, the variables are cointegrated, and we successfully estimated cointegration regressions for each equation in the system. Third, the error-correction terms are significant in the error-correction models, confirming their role in the process of adjusting to deviations from the long-run equilibrium.

Our empirical study focuses on financial and sustainability performance measures. The analysis is performed at the company level and encompasses all sectors of the economy, as in the S&P 500. This approach differs from previous studies that compared industrial and financial companies separately and generally focused on only certain sustainability measures. We analyse the environmental, social, and governance (ESG) scores separately.