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

PC Patel, P Dahlin - Business Ethics, the Environment & …, 2022 - Wiley Online Library
PC Patel, P Dahlin
Business Ethics, the Environment & Responsibility, 2022Wiley Online Library
B 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 …
Abstract
B 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.
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