B-CORP certification and financial performance: A panel data analysis

Abstract

B-Corp certification is a fairly modern business phenomenon. Consequently, research on its relationship with key business strategy variables is still inconclusive, while longitudinal analyses of its link to financial performance are scarce. To determine whether business profit could be a robust argument to attract companies to assess and certify their social and environmental impact, in this research we explore the connection that exists between the B-Corp certification and corporate financial performance in the short-, medium- and long-term. For this purpose, we use an international sample of 103 B-Corp companies that have been certified in 2013–2020 and we use the S&P Capital IQ database to collect their economic data. A control sample of non-B-Corp companies is also collected to establish a comparison and avoid bias in the research. The findings show no differences in the performance of B-Corps and non-certified companies before the certification, so a selection effect does not seem to exist in B-Corp certification. Regarding the performance of companies after the certification, known as treatment effect, B-Corps have smaller economic return than pre- and non-certified companies during two years after certification. Nonetheless, after that and in the long run, differences in financial performance between pre-certified and B-Corps are not statistically significant. These findings set the basis for future studies aiming to understand the reasons behind the initial loss of profitability after the B-Corp certification.

Keywords

• B-Corp
• Certification
• Social impact
• Financial performance
• ROA
• Panel data