The Impact of Best Practices of Sustainability on Quality of Management: An Investigation at Brazilian Capital Markets

Abstract

The study of the relationship between best practices of sustainability and quality of management investigates one of the most relevant and topical issues involving researchers and professionals. For this investigation, a representative sample of 205 Brazilian companies was selected, covering the period from 2005 to 2009 to test for a possible relationship between participation in a sustainability index, an indicator of best practices of sustainability and indicators of the quality of management. After applying different econometric methods, it was possible to confirm the hypothesis that best practices of sustainability are associated with better performance, less risk and higher market value. Moreover, best practices of sustainability impact the value of companies directly and indirectly through the mediating variables of performance and risk. Finally, possible determinants of the quality of practices of sustainability are associated (1) with market values in a positive way and (2) with operating leverage, return on assets (ROA) and volatility in a negative way.