Cost of high leverage in socially responsible firms in a linear dynamic panel model. Evidence from product market interactions

Ahmed, Zeeshan; Saleem, Qasim; Ajmal, Muhammad; Jameel, Hajra

doi:10.1016/j.heliyon.2022.e09235

Cited by 1 publication

(1 citation statement)

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“…Thus, a better reputation in the marketplace with "socially responsible activities or green/sustainable products" can help firms build and safeguard their competitive advantages (Boubaker et al 2020) and thus allow these firms to charge a slightly higher price (than their competitors) for their products or services without losing customers. Socially responsible firms experience better growth in their sales in the product market, which resultantly heightens their financial benefits (Ahmed et al 2022). Overall, the loyalty and the buying behaviors of the consumers for the products or services of the firms in the product market increase the sale volume of these firms, which will enhance the return on sale and sales growth and eventually lead towards the value creation of these firms in the future (Brooks and Oikonomou 2018;Buallay et al 2020a;Fatemi et al 2018).…”

Section: Discussion On the Empirical Resultsmentioning

confidence: 99%

Environmental, Social, and Governance Performance and Value Creation in Product Market: Evidence from Emerging Economies

Bashir,

Zhao,

Qiu

et al. 2023

JRFM

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Using a unique sample of 13,412 firm-year observations from 19 countries of the emerging economies for the period of 2011 to 2019, we investigate the association between the firms’ environmental, social, and governance (ESG) performance and their value creation in the product market. Specifically, we first used the pooled OLS regression model for panel data as our baseline model and found that ESG performance (as well as its pillars) has a strong positive effect on the future value creation of the firms in the product market. We also conducted some additional analyses using various regression models, as well as adopting multiple tests for endogeneity, and the additional analyses revealed that the results are robust under different scenarios. Overall, the findings of this study highlight the importance of firm-level ESG performance for the value creation of firms in the product market in emerging economies and have theoretical and practical implications for academic researchers, market participants, and government entities in studying, evaluating, and governing firms’ ESG performance and reporting.

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