Event study methodology is used to examine the wealth effects, or stock 1993; Shrum, McCarty, and Lowrey, 1995). As these percepprice
reactions, to corporate announcements of green marketing activities. tions have increased, the green movement has received a great
Two procedures for measuring stock price reactions and two different degree of attention by the public in such areas as the media,
tests of significance are used in the study. The results for the sample of the political arena, special interest groups, and consumers
73 firms show that the market value for the average firm in the sample (Vandermerwe and Oliff, 1990; Zimmer, Stafford, and Stafdeclines
by 3.14% during the period from 10 days prior to 10 days after ford, 1994).
the news is announced. Announcements related to green products, recycling The movement has also begun to receive more attention
efforts, and appointments of environmental policy managers result in by managers who are increasingly moving from defensive and
insignificant stock price reactions. However, announcements for green reactive responses to the concern toward pro-active actions
promotional efforts produce significantly negative stock price reactions. (Vandermerwe and Oliff, 1990). Pro-active actions related to
Sampling by financial and operational characteristics shows that firms environmental issues is a subset of the well-documented area
with higher growth in earnings, larger firms, and firms with higher adver- of environmental management (see Clark, Varadarajan, and
tising-to-sales ratios experience relatively less negative stock price reac- Pride, 1994), which has been successfully applied to markettions.
Managerial implications of the results and directions for future ing (e.g., t ...