Does it pay for a firm to be green or “responsible” in other ways? And what are the effects of environmental or social policy on the economic success of companies? These questions are central for our understanding to incentives of corporations, to the functioning of markets, and to the role of policy in a market economy. The planned research project aims to address both questions. Using event study methodology, it analyzes the effect of corporate environmental and social performance as well as environmentally and socially motivated regulations on stock returns. Since stock return volatility is an important issue in financial markets and in the stock attractiveness for potential investors, we also examine the impact of corporate environmental and social performance on volatility.