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This paper investigates the correlation between firm´s financial and social/environmental performance for Brazilian companies from 2001 to 2007, based on two types of panel data econometric models, which aim to analyze correlation and causality. The fixed effects model was used to estimate correlation, while a panel data IV model was used to investigate causality. The results show a positive correlation between corporate social/environmental and financial performance, mainly in the case of internal social investment, which is strongly positively correlated with the variable return on assets (ROA). The causality analysis also showed that the internal social investment has a positive and significant effect on ROA. This result is in accordance with those obtained by Laan et al (2008), which indicate that disregarding the wishes of the primary stakeholders (employees, consumers and investors) contributes negatively to performance measures. [ABSTRACT FROM AUTHOR]

Four decades after its advent, the capital assets pricing model proposed by Nobel Prize laureate William Sharpe and by John Lintner, known as CAPM, remains the most widely used model in estimating firms' cost of capital and valuing portfolios. This is due to the model's predictive power for risk and risk-return ratios. The purpose of this article is to show that CAPM has empirical flaws associated with theoretical simplifications and difficulties implementing valid tests for the model. The article concludes that the limitations of CAPM are challenges to be explained by alternative models. [ABSTRACT FROM AUTHOR]