The impact of B Corp certification on financial stability: Evidence from a multi‐country sample

Abstract

AbstractB Corps are firms certified by the non‐profit B Lab for pursuing both economic and non‐economic goals. Whether B Corps realize a higher financial performance has met mixed evidence. Drawing on the stability‐change framework, we ask whether B Corp certification is associated with the level and volatility of financial performance. Also, expecting a greater focus on non‐economic activities after certification, equity ratio may decline as shareholders may question the increased non‐economic focus. Using nearest neighbor propensity score matched pair method, we draw on a multi‐country sample of 355 B Corps and 623 non‐B Corps. Our findings are not encouraging. B Corp certification does not provide financial gains nor financial stability, and equity ratio declines and becomes more volatile following certification. Our findings paint a gloomy picture of limited economic benefits and declining participation of equity holders following B Corp certification.