The effects of environmental, social and governance disclosures and performance on firm value: A review of the literature in accounting and finance

Abstract

This paper not only attempts to survey the burgeoning literature on environmental, social and governance disclosures and performance and their effects on firm value, but its focus also lies on highlighting stylised observations coming from the most recent work that has not yet become part of the 'conventional wisdom' in the field. In addition, it outlines some of the crucial knowledge gaps and interesting questions that have not, as of yet, been addressed and thus outlines a potential agenda for future research on socially responsible investing. Lastly, it introduces the papers published in this special issue of the British Accounting Review.

Impact of disclosure and assurance quality of corporate sustainability reports on access to finance

“…Although by definition, CSR is not related to financial performance, in literature this relationship has been studied in great detail (see, e.g., Margolis & Walsh, 2003;Brooks & Oikonomou, 2018;). Yet the consensus regarding the nature of the relationship is missing.…”

Green M&A, legitimacy and risk‐taking: evidence from China’s heavy polluters

“…These include strategies for organisational adaptation to climate change and the market impact of climate‐related events and policies. The implications of climate change and ESP for risk assessment, risk management strategy and practice, investment strategy and valuation, and firm financial and stock price performance are also major themes (Linnenluecke et al , 2017a,b; Brooks and Oikonomou, ; Han et al , ).…”

Environmental, social, and governance and company profitability: Are financial intermediaries different?

“…The relationship between social responsible conduct and company performance has been deeply investigated in the literature in the last four decades (Brooks & Oikonomou, 2017;Friede et al, 2015). As mentioned above, it may also be perceived as a particular topic of the instrumental stakeholder theory and the resource-based view of the firm.…”

“…Based on previous studies (Barnett & Salomon, 2012;Simpson & Kohers, 2002;Soana, 2011;Van der Laan, Van Ees, & Van Witteloostuijn, 2008), we choose an accounting measure (return on assets [ROA]) as a dependent variable, because Brooks and Oikonomou (2017) claim that CSR has a more beneficial effect on accounting performance measures than on their stock prices. Moreover, using ROA allows us to efficiently compare industrial firms with financial intermediaries' profitability (instead of the financial profitability measure return on equity, which is only valid for financial firms, even though it uncovers comparable financial information as ROAA (Simpson & Kohers, 2002).…”