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Journal of Business Ethics

Erschienen in:

30.05.2016

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

verfasst von: Amal Aouadi, Sylvain Marsat

Erschienen in: Journal of Business Ethics | Ausgabe 4/2018

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Abstract

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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The majority of prior studies deal exclusively with environmental news, either disclosed by the firm itself or by other sources (Al-Tuwaijri et al. 2004; Barth and McNichols 1994; Clarkson et al. 2004; Moneva and Cuellar 2009).

For instance, as Da et al. (2011) point out, “…a news article in the Wall Street Journal does not guarantee attention unless investors actually read it.”.

Jiao (2010), El Ghoul et al. (2011) and Flammer (2013).

Since the dummy method would induce a loss of information, we have re-run our baseline models with the raw level of ESG controversies. The results remain unchanged and are available upon request.

Results are available upon request.

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Titel: Do ESG Controversies Matter for Firm Value? Evidence from International Data
verfasst von: Amal Aouadi
Sylvain Marsat
Publikationsdatum: 30.05.2016
Verlag: Springer Netherlands
Erschienen in: Journal of Business Ethics / Ausgabe 4/2018
Print ISSN: 0167-4544
Elektronische ISSN: 1573-0697
DOI: https://doi.org/10.1007/s10551-016-3213-8

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