CSR engagement and financial risk: A virtuous circle? International evidence

Chollet, Pierre; Sandwidi, Blaise W.

doi:10.1016/j.gfj.2018.03.004

Cited by 148 publications

(122 citation statements)

References 37 publications

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“…Asset4 collects the ESG data based on 61 environmental, 51 social and 54 governance indicators 1 . Previous studies have also used this database as a proxy for environmental, social and governance data (Chollet & Sandwidi, 2018;Ioannou & Serafeim, 2012;Velte, 2017). We have used the ESG data of 93 emerging market banks out of 117 listed.…”

Section: Methodsmentioning

confidence: 99%

Do environmental, social and governance performance affect the financial performance of banks? A cross-country study of emerging market banks

Shakil

Mahmood

Tasnia

et al. 2019

MEQ

169

117

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Purpose Earlier firms were evaluated mostly from their financial performance perspective, but with the increasing attention to sustainability goals, environmental, social and governance (ESG) performance of firms became key concerns to stakeholders. The purpose of this paper is to explore the effects of ESG performance of banks on their financial performance, in the context of emerging markets. Design/methodology/approach This study employs the generalised method of moments technique for estimation purpose due to the dynamic nature of the data and to correct for endogeneity. This study uses the ESG performance data of 93 emerging market banks from 2015 to 2018, available in Asset4 ESG database of Refinitiv, formerly known as Thompson Reuters. The accounting and financial data are collected from Refinitiv Datastream database. Findings The findings indicate a positive association of emerging market banks’ environmental and social performance with their financial performance, but governance performance does not influence financial performance. Originality/value While many studies exist on the association of ESG concerns of an organisation with their financial profitability, the literature on in the context of banking is still limited. To the best of the authors’ knowledge, this is the first study that examines the effect of ESG practices of banks on their financial performance in the context of emerging economies.

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Section: Methodsmentioning

confidence: 99%

Do environmental, social and governance performance affect the financial performance of banks? A cross-country study of emerging market banks

Shakil

Mahmood

Tasnia

et al. 2019

MEQ

169

117

View full text Add to dashboard Cite

show abstract

“…In addition, Jo and Na (2012) find that CSR is negatively associated with the volatility of stock returns in U.S. listed firms. Recently, Chollet and Sandwidi (2018) examine the effect of CSR engagement and firm's financial risk using international sample from 2003 to 2013, except Indonesia. They contribute to the literature by finding a negative association between CSR engagement and firm's risk based on large sample.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Corporate Social Responsibility (CSR) and Risk Taking: Evidence from Indonesia

Mulia

Joni

2019

JOFRP

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In this paper, we investigate the effect of Corporate Social Responsibility (CSR) on risk taking in Indonesia. We hand collect CSR and other corporate governance data from 2016-2017 for publicly listed firms on the Indonesian Stock Exchange (IDX). The results, based on 820 firm-year observations, suggest that CSR activity is negatively related to corporate’s risk. This means the presence of CSR activity is positively perceived by stakeholders. Therefore, it reduces operating and market risks of the company. Also, we test for endogeneity and the main findings remain similar.

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“…We use the Thomson Reuters' Asset4 database to draw ESG data that measure corporate performance in four fields: economic, environmental, social, and corporate governance (Ioannou & Serafeim, 2015;Chollet & Sandwidi, 2018). Following research in the field of examination, ESG data provided by the Asset4 database are reliable proxies to describe a firm's CSR engagement (Semenova & Hassen, 2014).…”

Section: Data Collection and Variablesmentioning

confidence: 99%

“…A set of control variables has been introduced in the econometric analysis following prevailing literature in the field (Hart & Ahuja, 1996;King & Lenox, 2001;Chollet & Sandwidi, 2018;Salvi et al, 2018). Control variables employed are classified into two categories: (1) firm characteristics (firm size, EBITDA margin and financial leverage) and (2) country characteristics (regulatory quality, rule of law index and control of corruption).…”

Section: Control Variablesmentioning

confidence: 99%

CSR and Corporate Financial Performance: An Inter-Sectorial Analysis

Salvi¹,

Doronzo²,

Giakoumelou³

et al. 2019

IJBM

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This study examines the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP), shedding new light on the lack of academic consensus and prevailing failure to deal with endogeneity in data. To this purpose, the authors recalculate ESG performance starting from the four pillars (economic, environmental, governance and social) provided by Thomson Reuters’ Asset4 database, able to determine a firm’s CSP. We adjust each ESG pillar score accounting for the firm’s sector, size and headquarter geographic area. We empirically test the relationship with a Generalized Method of Moments approach (GMM) in order to tackle the widely disputed endogeneity issues arising in this type of datasets. Results highlight a positive relationship between CSR, as measured in a tailored manner in this study, and corporate financial performance.

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CSR engagement and financial risk: A virtuous circle? International evidence

Cited by 148 publications

References 37 publications

Do environmental, social and governance performance affect the financial performance of banks? A cross-country study of emerging market banks

Do environmental, social and governance performance affect the financial performance of banks? A cross-country study of emerging market banks

Corporate Social Responsibility (CSR) and Risk Taking: Evidence from Indonesia

CSR and Corporate Financial Performance: An Inter-Sectorial Analysis

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