Determinants of Corporate Environment, Social and Governance (ESG) Reporting among Asian Firms

Rahman, Rashidah Abdul; Alsayegh, Maha Faisal

doi:10.3390/jrfm14040167

Cited by 69 publications

(78 citation statements)

References 53 publications

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Section: Literature Reviewmentioning

confidence: 99%

“…As Rahman and Alsayegh (2021) point out, no generally accepted theory explains corporate voluntary disclosure practices, but it can be argued that the legitimacy theory is currently dominant in the ESG literature. It is used to explain or predict particular sustainability reporting practices by managers (Dyduch and Krasodomska, 2017;Gray et al, 1995;Hooghiemstra, 2000;Rahman and Alsayegh, 2021). Suchman (1995: 574) stated that legitimacy theory could be defined as a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Legitimacy theory posits that an organization would voluntarily report its actions, such as disclosing certain ESG information, if management believed the organization's societies desired those actions. Researchers who use the legitimacy framework suggest that ESG disclosure responds to public pressure (Ellili, 2020;Hahn and Kühnen, 2013;Rahman and Alsayegh, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

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The Impact of CSR/ESG on the Cost of Capital: A Case Study of US Companies

Piechocka-Kałużna¹,

Tłuczak²,

Lopatka³

2021

ERSJ

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Purpose:The paper identifies the direction and strength of the relationship between individual ESG elements (and ESG as a whole) and the weighted average cost of capital, the cost of equity, and debt. The research was based on US market company data from the Thomson Reuters Eikon database. Some modifications have been applied to the survey methodology compared to that previously used in the literature, making it possible to present comprehensive and more congruent results. Identifying the direction and strength of the relationship between individual elements of ESG and ESG as a whole and the cost of capital (weighted average, equity, and debt). Design/Methodology/Approach: This paper incorporates an analytical approach based on the results of the original research. Findings: ESG and its components affect the cost of capital (weighted average, equity, and debt) Practical Implication: Disclosure of CSR/ESG practices can improve a company's financial position because it implies the ability to raise capital with lower cost, which, in turn, induces a better financial result. Knowledge of the existence of such exist is essential when most companies have to look for further savings (cost reduction) due to pandemic impediments. Originality/Value: The originality and value of an article are manifested on three levels: 1. There is a paucity of comprehensive empirical research in the literature on the subject; 2. To date, there has been no simultaneous, large sample study of the impact of ESG and its elements on the weighted average cost of capital and on the costs of raising equity and debt separately; 3. To date, there have been no studies on the relationship between the variables mentioned in 2, including a time lag, and here it is assumed that the impact of ESG and its elements on the cost of capital, due to the nature of reporting, may become apparent at the earliest in the next fiscal year.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

The Impact of CSR/ESG on the Cost of Capital: A Case Study of US Companies

Piechocka-Kałużna¹,

Tłuczak²,

Lopatka³

2021

ERSJ

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“…The last-mentioned theory (legitimacy) is perhaps the most frequently associated in the literature precisely with the aspect of ESG disclosures. Given that our previous article discusses it in more detail, we will only synthetically mention that it is used to explain particular sustainability reporting practices by managers and allows for a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions (Dyduch and Krasodomska, 2017;Hooghiemstra, 2000;Meek et al, 1995;Rahman and Alsayegh, 2021;Suchaman, 1995). The literature further highlights that ESG disclosures respond to societal needs (and even public pressure) in this regard (Hahn and Kühnen, 2013;Rahman and Alsayegh, 2021).…”

Section: The Impact Of Esg Reporting On the Cost Of Capital: An Example Of Us Healthcare Entities 682mentioning

confidence: 99%

“…Given that our previous article discusses it in more detail, we will only synthetically mention that it is used to explain particular sustainability reporting practices by managers and allows for a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions (Dyduch and Krasodomska, 2017;Hooghiemstra, 2000;Meek et al, 1995;Rahman and Alsayegh, 2021;Suchaman, 1995). The literature further highlights that ESG disclosures respond to societal needs (and even public pressure) in this regard (Hahn and Kühnen, 2013;Rahman and Alsayegh, 2021). It is indicated that stakeholders put increasing pressure on companies to prove that they operate sustainably, reduce negative environmental and social impacts, and implement sustainability measures (Eliwa et al, 2019;Manes-Rossi et al, 2020;Raimo et al, 2021).…”

Section: The Impact Of Esg Reporting On the Cost Of Capital: An Example Of Us Healthcare Entities 682mentioning

confidence: 99%

The Impact of CSR/ESG Reporting on the Cost of Capital: An Example of US Healthcare Entities

Piechocka-Kałużna¹,

Tłuczak²,

Lopatka³

2021

ERSJ

View full text Add to dashboard Cite

Purpose: Identifying the direction and strength of the relationship between individual elements of ESG and ESG as a whole and the cost of capital (weighted average, equity, and debt) in the healthcare industry. Design/Methodology/Approach: This paper incorporates an analytical approach based on the results of the original research. Findings: According to our conclusions based on empirical studies of the US healthcare industry, ESG and its corporate governance component translate into the weighted average cost of capital and one of its components, i.e., the cost of equity. Practical Implication: The healthcare sector is a critical element of the pandemic-determined economic reality. The possibility of obtaining cheaper capital, e.g., for its development, is therefore of considerable importance. This paper shows that the weighted average cost of capital (WACC) and the cost of equity is significantly affected by ESG and the corporate governance component. About the cost of debt, no such relationships can be established. In our view, the existence of such dependencies (allowing for reducing the cost of capital) is crucial for the managers of companies from this socially important sector. Originality/Value: The article studies on the healthcare industry rarely focus on rationalizing the cost of capital. The literature presenting similar studies (linking the presentation of ESG disclosures with the cost of money), although concerning other industries, also suggests a lack of comprehensive empirical studies on this topic. Therefore, our study reduces this research gap in this context while the research methodology itself is also innovative.

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Determinants of environmental, social, and governance disclosure: A systematic literature review

Seow

2023

Bus Strat Env

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The popularity of environmental, social, and governance (ESG) investing or socially responsible investing is pushing private sectors to improve their ESG performance. Stakeholders, namely, investors, are relying on firms' environmental, social, and governance disclosures (ESGD) to evaluate their ESG performance and strategize their investment decision‐making. Since firms have substantial discretionary power in deciding the quantity and quality of ESGD, understanding the drivers and motivations of ESGD is paramount. This study examines the literature on the determinants of ESGD, and 36 articles published in a period spanning from 2006 to 2022 were analyzed and synthesized via a systematic literature review approach. Ninety‐one researchers from 30 countries contributed to these studies. Of these studies, 28% perform cross‐country investigations. This study found that although there is no single underpinning theory for ESGD, ESGD determinant studies are well supported by multiple theoretical frameworks, such as stakeholder theory, legitimacy theory, and institutional theory. This study reveals many factors that have an impact on ESGD, such as natural disasters, political and legal systems, ownership structure, board characteristics, and the CEO's characteristics. This study contributed to the burgeon of literature on ESG by offering valuable insights into the antecedents to ESG performance and facilitating future enhancements of a better ESGD framework. Lastly, this study also reveals future research directions for scholars to enrich the burgeoning literature in ESG.

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Determinants of Corporate Environment, Social and Governance (ESG) Reporting among Asian Firms

Cited by 69 publications

References 53 publications

The Impact of CSR/ESG on the Cost of Capital: A Case Study of US Companies

The Impact of CSR/ESG on the Cost of Capital: A Case Study of US Companies

The Impact of CSR/ESG Reporting on the Cost of Capital: An Example of US Healthcare Entities

Determinants of environmental, social, and governance disclosure: A systematic literature review

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