Environmental, social and governance initiatives and wealth creation for firms: An empirical examination

This study examines the effect of environmental, social, and governance (ESG) activities on firm performance of 4,887 global companies. Mean difference test shows that firms with a high level of ESG activities are different from their low‐ESG counterparts. The two‐stage least square results suggest...

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Bibliographic Details
Published inManagerial and decision economics Vol. 41; no. 5; pp. 710 - 729
Main Authors Bhaskaran, Rajesh Kumar, Ting, Irene Wei Kiong, Sukumaran, Sujit K., Sumod, Saraswathy Divakaran
Format Journal Article
LanguageEnglish
Published Chichester Wiley Periodicals Inc 01.07.2020
Subjects
Companies
Corporate governance
Environmental effects
Environmental governance
Organizational performance
Pollution control
Wealth
Welfare
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Summary:This study examines the effect of environmental, social, and governance (ESG) activities on firm performance of 4,887 global companies. Mean difference test shows that firms with a high level of ESG activities are different from their low‐ESG counterparts. The two‐stage least square results suggest that ESG activities on (a) the welfare for internal stakeholders and best corporate governance practices are beneficial for firm performance and (b) antitakeover mechanisms (pollution control) adopted by firms are negatively (positively) valued by market players. Overall, this is the first study to examine the effects of ESG on the market‐based and accounting‐based performance of global firms.
ISSN:0143-6570
1099-1468
DOI:10.1002/mde.3131