This article aims to detect how ESG adds value to the long-term shareholder value creation and to discover whether businesses are aware of positive ESG effects and, therefore, whether they will become more ESG-conscious. By conducting a qualitative content analysis on the academic literature, this article firstly aims to determine if shareholders’ value is positively affected by corporate ESG awareness. Secondly, to test whether companies are becoming more conscious about the importance of ESG, the mission statements of publicly listed Central and Eastern European (CEE) companies are compared to their decade-old versions. This analysis allows us to conclude on whether companies have shifted their attention to the ESG factors as a part of their purpose of existence and, therefore, for long-term shareholder value creation, which is one of the main goals of the exchange-listed enterprises. The content analysis results show that companies with higher sustainability awareness ensure shareholder value creation via improved financial performance, management quality as well as reduced risk metrics. Additionally, qualitative nonfinancial factors such as reputation, stakeholder trust, employee satisfaction and engagement provide an even more significant effect on the long-term value than the pure financial matters. The theoretical trend is found to be supported by the fact that sustainability practice and consumer-oriented keywords dominate the mission statements of CEE companies, while keywords related to shareholders and profit experienced the most significant decrease from 2012 to 2021. The present research is unique as it looks at how companies tend to become more ESG aware, integrating the sustainability perspective into their mission statements in response to the global sustainability trend.
Abstract. The present paper provides practical implications for the Central and Eastern European equity investors, who seek dividend income in addition to the capital appreciation. The insight into the dividend puzzle in the CEE companies, provided in the research, gives an overview of the dividend yields and payment stability as well as the relationship between the dividend payments and the type of ownership. Main findings of the study prove that the highest yield and the highest payout ratio are obtained in the case of strategic investor acting as a major shareholder (>10% of ownership capital). Binary logistic regression results provide the possibility to forecast whether the company will pay dividends. The typical dividend payer should not have family/management as a major investor, the ownership still should be concentrated and the investor preferably should be of local origin.
Enterprise digitalization is a way for companies to make their processes more efficient, to enhance their marketing strategies, and improve their competitive moat within the global competitive landscape. To see how fast Baltic companies are adapting to digitalization trend and, therefore, how good they are at keeping or improving their competitive advantage, we have developed a digital maturity assessment methodology, which was applied to the listed enterprises in Estonia, Latvia, and Lithuania. This methodology allowed us to detect certain digital maturity trends, such as the significant growth of the attention paid towards concepts related to ‘process automation’. Further, it was clear that many companies are concerned with online business, which can be well-seen from the analyzed annual reports. Additionally, we have compared the level and dynamics of the company’s digital maturity to its financial and market performance. We have concluded that, although there is a positive relationship between several financial indicators (e.g., sales growth), it is too early to see the positive effect of digital maturity on a company’s stock performance.
As the environmental, social and governance (ESG) adoption practices in large and developed economies are becoming more sophisticated, in the still developing economies the non-financial information disclosure practices are gradually evolving. This article aims to capture the ESG implementation practices and challenges of the financial investors and banks operating in the Baltic countries -Lithuania, Latvia and Estonia. By analyzing survey data of 37 financial market players, the results reveal that around 81% of the respondents already use ESG data when evaluating their investments, which can partly be explained by the regulatory drivers coming from the large share of private equity and venture funds managing local and international public funding. Moreover, a substantial average weight of 0.39 is found to be attributed to the sustainability factors in the investment evaluation process, which is rather high given the general perception of the ESG being a recent addition to the investment evaluation tools. While 51% of the respondents admitted that Covid-19 pandemic has made no changes in their ESG practices, there are other common challenges named by the investors e.g. lack of general and quantifiable ESG data from the side of the companies and struggles to find matching benchmarks for the large share of the small and midsized companies dominating the Baltic investment market. By addressing the obstacles highlighted by this research, the policy makers can explore the ways how to foster a wider adoption of ESG policies in the Baltic investment universe.
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