The effect of ISO 14001 certification announcements on stock performance

Anthony Paulraj, Pieter de Jong

Research output: Journal PublicationArticlepeer-review

69 Citations (Scopus)


Purpose: This study aspires to explore how the US stock market reacts to ISO 14001 certification announcements. Design/methodology/approach: The paper employs an event-study methodology on a sample of 140 announcements and matching control firms to study the impact of ISO 14001 certification announcements. Findings: The results suggest that ISO 14001 certification announcements have a negative impact on stock performance. More importantly, they show that the shareholder wealth reduced due to these certifications announcements. Research limitations/implications: This study focuses on short-term stock market reaction. Future studies should consider the entire sample of ISO 14001-certified firms within the USA and use certification date to evaluate short- as well as long-term improvements in shareholder wealth. Practical implications: The results suggest that firms will need to educate shareholders about their actions towards the betterment of the environment. Such coordinated communication will ensure that the ISO 14001 standard is highly regarded, widely adopted, and even requested by shareholders. Originality/value: Past empirical studies indicate that certified environmental management systems help organizations to reduce waste and pollution, thereby ultimately resulting in superior environmental and economic performance. At the same time, given its focus on the process rather than performance outcomes, opponents criticize ISO 14001 suggesting that it is just a label for image building. Owing to this dilemma, it is pertinent to evaluate how shareholders perceive a firm's attainment of ISO 14001 certification announcements.

Original languageEnglish
Pages (from-to)765-788
Number of pages24
JournalInternational Journal of Operations and Production Management
Issue number7
Publication statusPublished - Jun 2011
Externally publishedYes


  • Environmental management systems
  • Event study
  • ISO 14001 certification
  • Stock markets
  • Stock performance
  • United States of America

ASJC Scopus subject areas

  • Decision Sciences (all)
  • Strategy and Management
  • Management of Technology and Innovation


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