ESG in Corporate Finance

This literature review delves into the theoretical and empirical impacts of Environmental, Social, and Governance (ESG) factors on corporate finance. It explores how ESG initiatives influence financial performance, risk mitigation, and market perceptions through various theoretical frameworks such as stakeholder theory, signaling theory, and the resource-based view. The review also analyzes regional and sectoral variations, highlighting challenges like ESG data inconsistency and rating divergence. Key topics include the relevance of ESG in corporate finance, theoretical frameworks underpinning ESG integration, and empirical evidence supporting the positive impact of ESG on financial performance. The conclusion emphasizes the importance of integrating ESG into corporate finance strategies to achieve long-term sustainability and value creation.