Stakeholders and Stocks; Assessing the Interaction between International Companies’ Stakeholder Performance and Their Stock Market Returns

In this paper, we assess the interaction between international firms’ stakeholder performance and their stock market returns. Using data from more than 2,000 firms from 24 countries and 15 industries for the period 2003-2007, we analyze stakeholder performance for firms in different countries/regions and industries. We measure stakeholder performance as firms’ community involvement, their management, customer relations, employee relations, environmental management, and their relationship with contractors and suppliers. We establish that the interaction differs per stakeholder, per country/region, and per industry. Moreover, we conclude that the stakeholders ‘environment’ and ‘community’ are priced factors in the international business environment.