Corporate Purpose and Market Performance: Evidence on Stock Volatility, Financial Performance, and Sustainability Ratings in Global and European Companies

This study examines whether the explicit communication of corporate purpose, and the content of purpose statements, are associated with financial and sustainability outcomes in global and European large firms. Drawing on a sample of 377 publicly traded Fortune Global 500 companies, including 149 firms that explicitly publish a purpose statement on their corporate websites, the analysis combines NVIVO-based content coding with FactSet financial indicators and Truvalue Labs ESG scores. Purpose statements were coded for the presence of key components, including sustainability and corporate responsibility, values, customer orientation, distinctive competence, future orientation, and ESG-related dimensions. Welch’s t-tests were used to compare annualized stock returns, stock volatility, and ESG pillar scores across firms with and without explicit purpose statements and across firms whose statements contained specific components. The findings show that firms explicitly communicating purpose exhibit significantly lower stock volatility. In addition, statements emphasizing competence, customer orientation, and sustainability-related content are associated with lower volatility, suggesting that purpose communication may operate as a strategic signal that reduces uncertainty and enhances stakeholder confidence. Environmental content in purpose statements is positively associated with stronger environmental and governance ESG scores. In the European subsample, sustainability- and values-oriented purpose statements are also associated with higher stock returns. These results contribute to the emerging corporate purpose literature by linking external purpose communication to measurable market and sustainability outcomes, while also revisiting the mission statement tradition in a contemporary ESG context. Overall, the study suggests that purpose is more than symbolic rhetoric when explicitly communicated and substantively aligned with sustainability and stakeholder commitments.