Behavioral Issues for Sustainable Investment Decision-Making: A Literature Review

Tomo, Andrea; Landi, Giovanni Catello

doi:10.5539/ijbm.v12n1p1

Cited by 15 publications

(9 citation statements)

References 20 publications

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“…In the past several decades, the interest from academia in social issues applied to investment decision-making has experienced a strong growth. Additionally, renowned rating agencies have paid much attention to the formulation of innovative indicators capable of reporting the social responsibility of a company (Tomo and Landi, 2017).…”

Section: Background Of the Problemmentioning

confidence: 99%

Towards a more ethical market: the impact of ESG rating on corporate financial performance

Landi

Sciarelli

2019

SRJ

Self Cite

214

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Purpose This paper fits in a research field dealing with the impact of Corporate Ethics Assessment on Financial Performance. The authors argue how environmental, social and governance (ESG) paradigm, meant to measure corporate social performance by rating issuance, can impact on abnormal returns of Italian firms listed on Financial Times Stock Exchange Milano Indice di Borsa (FTSE MIB) Index, developing a panel data analysis which runs from 2007 to 2015. Design/methodology/approach This study aims at exploring whether socially responsible investors outperform an excess market return on Italian Stock Exchange because of their investment behavior, testing statistically the relationship between the yearly ESG assessment issued by Standard Ethics Agency on FTSE MIB’s companies and their abnormal returns. To verify the impact of an ESG Rating on a company’s abnormal return, the authors developed a panel data analysis through a Fixed Effects Model. They measured abnormal returns via Fama–French approach, running a yearly Jensen’s Performance Index for each company under investigation. Findings The empirical results denote in Italy both a growing interest to corporate social responsibility (CSR) and sustainability by managers over the past decade, as well as an improving quality in ESG assessments because of a reliable corporate disclosure. Thus, despite investors have been applying ESG criteria in their stock – picking operations, the authors found a not positive and statistically significant impact in terms of market premium, when they have been undertaking a socially responsible investment (SRI). Practical implications The findings described above show that ethics is not yet a reliable fundraising tool for Italian-listed companies, despite SRIs having a positive growth rate over past decade. Investors seem to be not pricing CSR on Stock Exchange Market; therefore, listed companies cannot be rewarded with a premium price because of their highly stakeholder oriented behavior. Originality/value This paper explores, for the first time in Italy, when market extra-returns (if any) are related to corporate social performance and how managers leverage ethics to build capital added value.

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Section: Background Of the Problemmentioning

confidence: 99%

Towards a more ethical market: the impact of ESG rating on corporate financial performance

Landi

Sciarelli

2019

SRJ

Self Cite

214

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“…In so far as accounting and financial information is concerned, data relating to the economic, environmental and social aspects lie at the heart of the major concerns of company stakeholders seeking more transparency (Baboukardos and Rimmel, 2016; Akisik and Gal, 2017; Welbeck et al , 2017; Baalouch et al , 2019; Yu et al , 2020; Murashima, 2020). In addition to this, given the weaknesses in accounting information that focuses mainly on financial data and neglect nonfinancial data, investments in integrated reporting are increasingly considered to be a strategic element for the growth, profitability and competitiveness of a company (Akisik and Gal, 2017; Arslanagic-Kalajdzic and Zabkar, 2017; Tomo and Landi, 2017). Integrated reporting is the latest novelty in the corporate reporting field.…”

Section: Introductionmentioning

confidence: 99%

Board characteristics and integrated reporting quality: evidence from ESG European companies

Chouaibi

Zouari

2021

EMJB

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PurposeThe aim of this study is to analyze the possible relationship between board characteristics and integrated reporting quality in an international setting.Design/methodology/approachTo test the study's hypotheses, the authors applied linear regressions with a panel data, and the authors collected data from the Thomson Reuters database (ASSET4) and from the annual reports from European companies to analyze data of 253 listed companies selected from the environmental, social and governance (ESG) index between 2010 and 2019.FindingsThe reached empirical results prove to indicate well that both of the board size, independence and diversity appear to have a significantly positive effect on the integrated reporting quality. Noteworthy, also, is the fact that the appointment of an independent nonexecutive chairman is positively associated with the integrated reporting related quality, and holds for firms with a nonindependent chairman.Practical implicationsBeyond the theoretical implications, our study also has several practical implications. These findings are particularly relevant for managers, shareholders, and policymakers. Thus, stakeholders should consider the accuracy of disclosure in determining the optimal reporting strategy (reducing risk estimation, returns' stock volatility, increasing long-term shareholder value and reputation of the firm).Originality/valueThis article is motivated by the low number of works in the context about the corporate social responsibility and sustainability issues. It makes an important contribution to the academic literature by adding to the limited body of research on integrated reporting and corporate governance in an ESG company setting. The study is also important for practitioners seeking to improve the quality of their integrated reports.

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“…Increasing interest has been focused on the impact of ESG on a firm’s economic and financial performance (Do and Kim, 2020; Landi and Sciarelli, 2019; Velte, 2017). Renowned rating agencies have paid great attention to formulating indicators that can express the degree of social and environmental responsibility of a firm (Tomo and Landi, 2017). Based on ESG reports and ratings, firm performance can be assessed and measured over time by investors, managers and other stakeholders (Auer and Schuhmacher, 2016; Huber et al , 2017; Limkriangkrai et al , 2017; Miralles-Quirós et al , 2018).…”

Section: Introductionmentioning

confidence: 99%

R&D investment, ESG performance and green innovation performance: evidence from China

Shang

2020

174

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Purpose The purpose of this paper is to examine the impacts of research and development (R&D) investment and environmental, social and governance (ESG) performance on green innovation performance. This paper also investigates the moderating effect of ESG performance between R&D investment and green innovation performance. Design/methodology/approach The study uses the data of 223 Chinese listed companies over the period 2015–2018. The ESG indices issued by SynTao Green Finance are used to measure ESG performance. Green innovation performance is measured by the total number of green patents, the number of green invention patents and the number of green non-invention patents. Finally, multiple regression analysis is applied to test the research hypotheses. Findings The results show that R&D investment has a positive impact on green innovation performance and ESG performance can increase the number of green invention patents. In addition, ESG performance moderates the relationship between R&D investment and green innovation performance. Practical implications The findings may help managers and policymakers in developing countries to make ecological innovation strategies to achieve corporate sustainability. Originality/value This is the first study to examine the impacts of R&D investment and ESG performance on green innovation performance in the context of China, an emerging market.

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Behavioral Issues for Sustainable Investment Decision-Making: A Literature Review

Cited by 15 publications

References 20 publications

Towards a more ethical market: the impact of ESG rating on corporate financial performance

Towards a more ethical market: the impact of ESG rating on corporate financial performance

Board characteristics and integrated reporting quality: evidence from ESG European companies

R&D investment, ESG performance and green innovation performance: evidence from China

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