Do ESG Controversies Matter for Firm Value? Evidence from International Data

The aim of this paper is to investigate the relationship between environmental, social, and governance (ESG) controversies and firm market value. We use a unique dataset of more than 4000 firms from 58 countries during 2002-2011. Primary analysis surprisingly shows that ESG controversies are associa...

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Vydáno v:Journal of business ethics Ročník 151; číslo 4; s. 1027 - 1047
Hlavní autoři: Aouadi, Amal, Marsat, Sylvain
Médium: Journal Article
Jazyk:angličtina
Vydáno: Dordrecht Springer 01.09.2018
Springer Netherlands
Springer Nature B.V
Springer Verlag
Témata:
Business administration
Business and Management
Business Ethics
Business valuation
Companies
Corporate governance
Disputes
Economics and Finance
Education
Environmental governance
Environmental management
Ethics
Freedom of the press
Governance
Humanities and Social Sciences
International
Internet
Management
Market value
Markets
Philosophy
Quality of Life Research
Reputations
Social responsibility
Studies
Visibility
Investors’ attention
Firm visibility
Firm value
Corporate social performance
ESG controversies
ISSN:0167-4544, 1573-0697
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Shrnutí:The aim of this paper is to investigate the relationship between environmental, social, and governance (ESG) controversies and firm market value. We use a unique dataset of more than 4000 firms from 58 countries during 2002-2011. Primary analysis surprisingly shows that ESG controversies are associated with greater firm value. However, when interacted with the corporate social performance (CSP) score, ESG controversies are found to have no direct effect on firm value while the interaction appears to be highly and significantly positive. Building on this evidence, we attempt to explore the channels through which CSP may enhance market value. Conducting sample split analysis indicates that higher CSP score has an impact on market value only for high-attention firms, those firms which are larger, perform better, located in countries with greater press freedom, more searched on the Internet, more followed by analysts, and have an improved corporate social reputation. Thus, our findings provide new insights on the role of firm visibility through which firms can profit from their CSP.
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ISSN:0167-4544
1573-0697
DOI:10.1007/s10551-016-3213-8