Investigating the marginal impact of ESG results on corporate financial performance

Bruna, Maria Giuseppina; Loprevite, Salvatore; Raucci, Domenico; Ricca, Bruno; Rupo, Daniela

doi:10.1016/j.frl.2022.102828

Cited by 89 publications

(49 citation statements)

References 47 publications

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“…Differently from other studies using DEA to measure CFP (Bruna et al, 2022;Lu et al, 2023) The companies that are more concerned with environmental performance score higher on the Environmental (E) pillar, while companies with a greater focus on social responsibility score higher on the Social (S) pillar than on the pillars E and Corporate Governance (G) (Amel-Zadeh & Serafeim, 2018). Therefore, in order to bypass these differences, which could negatively affect the results, it was decided to use Refinitiv's ESG score calculated as the arithmetic mean of the score of each of the three pillars.…”

Section: Introductionmentioning

confidence: 83%

“…However, there is still little clarity regarding the link between ESG and FP, as empirical results are not unique (Rahi et al, 2022). In particular, some studies (Azmi et al, 2021;Bruna et al, 2022;De Lucia et al, 2020) showed that there is a positive relationship between ESG and FP, albeit nonlinear. Specifically, Fulton et al (2012) examine more than 100 academic studies on sustainable investments from around the world and shows that 85% of the studies emphasize a nonlinear but positive correlation between FP and ESG strategies.…”

Section: Literature Review and Research Questionsmentioning

confidence: 99%

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The impact of ESG factors on financial efficiency: An empirical analysis for the selection of sustainable firm portfolios

Iazzolino

Bruni

Veltri

et al. 2023

Corp Soc Responsibility Env

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Environmental, Social, and Governance (ESG) factors are increasingly at the center of corporate and investment decisions. In this context, the aim of the paper was to test whether ESG factors impact on financial efficiency of a sample of firms belonging to different European sectors. This study enriches the literature of the field through a multi-sectoral analysis. The Data Envelopment Analysis was used as widely considered in empirical and financial studies. Research findings showed that ESGs impact on firm efficiency differently over sectors: some of them are more sensitive than others to ESG factors. Furthermore, for most sensitive sectors the risk-return characteristics related to ESGs were represented in order to provide insights for investors aiming to construct efficient and sustainable firm portfolios to invest in.

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Section: Introductionmentioning

confidence: 83%

Section: Literature Review and Research Questionsmentioning

confidence: 99%

The impact of ESG factors on financial efficiency: An empirical analysis for the selection of sustainable firm portfolios

Iazzolino

Bruni

Veltri

et al. 2023

Corp Soc Responsibility Env

View full text Add to dashboard Cite

show abstract

“…This shows that the mediating effect of corporate financial risk is only exist for the corporates at the growth and maturity stages, meanwhile, the results of the Sobel test and Bootstrap test also verify this conclusion, therefore Hypotheses 3b, Hypotheses 3C are accepted and Hypothesis 3a is rejected. The reason for this phenomenon may be that corporates in the decline stage are usually less competitive in the market (Loderer et al, 2017), and their reduced profitability leads to a deterioration of their financial situation (Roe, 2021), and investing the ESG project with poor shortterm return rate of expenditure may elevate the financial pressure on corporates (Kim and Lyon, 2015;Bruna et al, 2022). Also, corporates in the decline stage usually do not conform to the investment propensity of institutional investors because of low efficiency, and the contribution of ESGP to the enhancement of their financing ability is diminished (Dahlquist and Robertsson, 2001;Cumming and Johan, 2010).…”

Section: The Mediation Effect Of Corporate Financial Risk In Differen...mentioning

confidence: 99%

“…The economic outcome of corporates' Environmental, Social, and Governance performance (ESGP) has become one of the hottest research aspects in the current global management and financial fields (Friede et al, 2015;Yu et al, 2018;Kim and Lyon, 2015;Skarmeas and Leonidou, 2013;Huang, 2021;Bruna et al, 2022). Through ESG practice, corporates involve environmental, social, and governance factors into their management and operation processes.…”

Section: Introductionmentioning

confidence: 99%

Does ESG always improve corporate performance? Evidence from firm life cycle perspective

Gao

Meng

Wang

et al. 2023

Front. Environ. Sci.

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In this study, drawing on firm life cycle theory, we focus on the corporate performance of Environmental, Social, and Governance (ESG) engagement via financial stress and consider the moderate effect of transparency, financial slack, and environmental uncertainty. The industry-year fixed effects panel regression analysis is executed based on the data including 11,742 firm-year observations for 1,486 Chinese A-share listed companies from 2010 to 2020. The results show that ESG performance can significantly improve corporate performance at all life cycle stages, especially when the corporate is in the growth stage. Moreover, the mechanism analysis shows that the financial risk mediates the relation between ESG performance and corporate performance for the corporates in the growth and maturity stages. The association between ESG and corporate performance is more pronounced when corporate information disclosure quality is high. Moreover, financial slack moderates and undermine the association between ESG and corporate performance in the maturity stages. Similarly, for the maturity and decline stages of corporate, environmental uncertainty moderates and undermines the association between ESG and corporate performance. Besides offering scientific evidence for the role of ESG ratings in relieving financial pressure and promoting corporate performance in growth and maturity stages, the results can also inform the regulators and/or investors of the benefit of engaging in corporates sustainability transition, which has implications for both the success of the regulatory regime and the advancement of long-term investment philosophy.

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“…They arrived at the conclusion that firms that have ESG show higher performance and fetch higher returns than firms that lack ESG. Bruna et al (2022) and Huang et al (2022) noted that the enterprise's ESG strategies have a positive and significant impact on the enterprise value and financial performance. In emerging and developing countries, especially, ESG reduces the cost of capital and increases the value of companies (Wong et al, 2021).…”

Section: Introductionmentioning

confidence: 99%

Does ESG performance promote total factor productivity? Evidence from China

Gao

Sun³

2022

Front. Ecol. Evol.

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Currently, environmental, social, and corporate governance (ESG) has become an all-pervasive term in the industrial sector, owing to its significant impact on corporate decision-making. While most of the studies provide evidence that the ESG significantly improves a firm's performance and value in the long run, few studies quantitatively analyzed the linkage between ESG and total factor productivity (TFP). Using the data of Chinese-listed companies during 2010–2020, we found that there is a positive relationship between ESG performance and TFP. ESG also improves the corporate TFP by reducing the financial constraints and improving the innovation input. Our extended analysis revealed that this beneficial effect tends to be stronger for SOEs (state-owned enterprises) and industries with high pollution levels. This study also brought to light some implications for Chinese firms in relation to their ESG practices and sustainable development.

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Investigating the marginal impact of ESG results on corporate financial performance

Cited by 89 publications

References 47 publications

The impact of ESG factors on financial efficiency: An empirical analysis for the selection of sustainable firm portfolios

The impact of ESG factors on financial efficiency: An empirical analysis for the selection of sustainable firm portfolios

Does ESG always improve corporate performance? Evidence from firm life cycle perspective

Does ESG performance promote total factor productivity? Evidence from China

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