Title: LEED certification and market value of the firm

Authors: Albena Ivanova; Marcel C. Minutolo

Addresses: Department of Management, Robert Morris University, 6001 University Blvd, Moon Township, PA 15108, USA ' Department of Management, Robert Morris University, 6001 University Blvd, Moon Township, PA 15108, USA

Abstract: This article extends signalling theory to research on voluntary green standards adoption and investigates the firm's value in green buildings. The study analyses the market valuation of investments in sustainable buildings, measuring the market reaction to three different types of leadership in energy and environmental design (LEED) announcements: 1) intent for application; 2) achievement of certification; 3) reinforcement of certification. The study hypothesises the market will react differently to intent, achievement and reinforcement signals. Empirical evidence shows a positive market reaction to LEED announcements in general, with positive but not statistically significant market reaction to the intent signals, and positive and statistically significant reaction to the achievement and reinforcement signals. Theoretical and practical implications are discussed.

Keywords: LEED certification; separating equilibrium; strategic management; signalling theory; standards; event study; market value; sustainable development; environment.

DOI: 10.1504/IJESD.2018.096852

International Journal of Environment and Sustainable Development, 2018 Vol.17 No.4, pp.317 - 330

Available online: 20 Nov 2018 *

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