Firms’ sustainability, financial performance, and regulatory dynamics: Evidence from European firms

Agoraki, Maria‐Eleni K.; Giaka, Maria; Konstantios, Dimitrios; Patsika, Victoria

doi:10.1016/j.jimonfin.2022.102785

Cited by 21 publications

(11 citation statements)

References 63 publications

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“…Moreover, building upon the recent body of research, we hypothesize that ESG reputational risk can influence the SOA in investments (Agoraki et al, 2023;Chasiotis et al, 2023;Dyck et al, 2019;Economidou et al, 2022;Fafaliou et al, 2022;Maxfield & Wang, 2021). This hypothesis is motivated by the positive influence of ESG reputation on corporate behaviour.…”

Section: Esg Reputational Risk In Determining Speed Of Investment Adj...mentioning

confidence: 93%

“…This competitive edge leads to reduced transaction and agency costs, encompassing monitoring, bonding, searching, and warranty expenses. Consequently, a lower level of ESG reputational risk signifies a heightened level of collaboration between businesses and their stakeholders, characterized by shared trust and support (Agoraki et al, 2023; Economidou et al, 2022). This enhanced relationship facilitates the adoption of long‐term‐oriented behaviours (Bénabou & Tirole, 2010; Eccles et al, 2014).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…The theory behind it is that there is less tolerance for firms with ESG reputational risk in headquarters that correspond to blue states and have a high degree of religiosity. We also add Industry Share ( Industry Share ), which is the proportion of firms in a given country's industry to all firms in the sample that are involved in that industry (Agoraki et al, 2023). Therefore, we account for any selection bias that may result from potential imbalances in the distribution of firms among industries.…”

Section: Addressing Protentional Endogeneity and Self‐selectionmentioning

confidence: 99%

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Does ESG reputational risk affect the efficiency and speed of adjustment of corporate investment?

Chasiotis,

Gounopoulos,

Konstantios

et al. 2023

Euro Fin Management

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This study explores the relationship between environmental, social, and governance (ESG) reputational risk and investment efficiency. We provide evidence that ESG reputational risk relates to higher corporate suboptimal investment (underinvestment) and a lower speed of adjustment back to the optimal investment level. Our findings hold for parametric and nonparametric estimations of underinvestment and are robust to several techniques that address endogeneity and self‐selection. Overall, our study highlights the important role of ESG reputational risk in determining corporate investment efficiency.

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Section: Esg Reputational Risk In Determining Speed Of Investment Adj...mentioning

confidence: 93%

Section: Hypotheses Developmentmentioning

confidence: 99%

Section: Addressing Protentional Endogeneity and Self‐selectionmentioning

confidence: 99%

See 1 more Smart Citation

Does ESG reputational risk affect the efficiency and speed of adjustment of corporate investment?

Chasiotis,

Gounopoulos,

Konstantios

et al. 2023

Euro Fin Management

Self Cite

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“…Brogi et al (2022) proposed a model to support the inclusion of ESG factors in banks' risk assessment of firms and showed that increased ESG awareness is strongly and very significantly associated with improved solvency and reduced credit risk of firms. Agoraki et al (2023) demonstrated that European firms with lower ESG reputational risk are less financial constrained and perform better.…”

Section: Literature Review and Research Questionsmentioning

confidence: 99%

The impact of ESG factors on financial efficiency: An empirical analysis for the selection of sustainable firm portfolios

Iazzolino

Bruni

Veltri

et al. 2023

Corp Soc Responsibility Env

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Environmental, Social, and Governance (ESG) factors are increasingly at the center of corporate and investment decisions. In this context, the aim of the paper was to test whether ESG factors impact on financial efficiency of a sample of firms belonging to different European sectors. This study enriches the literature of the field through a multi-sectoral analysis. The Data Envelopment Analysis was used as widely considered in empirical and financial studies. Research findings showed that ESGs impact on firm efficiency differently over sectors: some of them are more sensitive than others to ESG factors. Furthermore, for most sensitive sectors the risk-return characteristics related to ESGs were represented in order to provide insights for investors aiming to construct efficient and sustainable firm portfolios to invest in.

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“…A series of studies or empirical models have contributed in recent years to the process of evaluating the impact of ESG factors on financial performance among companies, but due to the lack of clear evidence [24,25] and the fact that the empirical results are not unequivocal [26], this link still remains unresolved. Several studies highlighted a positive, non-linear relationship between ESG and financial performance [27][28][29][30][31]. Moreover, recent research [32,33] has been oriented towards the analysis of the investment optimization in green production technologies and the study of the multi-item inventory system in order to ensure the sustainability of the multi-layer supply chain.…”

Section: Esg Impact On Financial Performancementioning

confidence: 99%

A Streamline Sustainable Business Performance Reporting Model by an Integrated FinESG Approach

Bogdan,

Rus,

Gherai

et al. 2023

Sustainability

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ESG reporting and disclosure enable financial performance by attracting revenues and optimizing managerial decisions. Within this landscape falls the present study that aimed to examine the quality of ESG reporting connected to the financial performance of listed companies. Stratified analysis revealed four groups of companies according to the average value of ROA and ROE indicators, as well as four classes according to the average ESG disclosure score. The analysis of GRI topics and materiality disclosure scores showed an average disclosure level on ESG components, located between a satisfactory and a good level of disclosure. Also, companies were found to be more inclined to disclose data on the sustainability strategy but provided poor and vague information on the business model. The results of comparative clustering analysis based on FinESG reporting and disclosure scores showed that 31.57% of companies maintained their position in the final ranking. Content analysis of sustainability reports by Leximancer, v.5.0 software highlighted that the most salient topic was “employees”, and it revealed correlations between the themes “employees” and “emissions”. The practical implications of the study were found in the promotion of an integrated reporting that best meets the needs of both stakeholders and those of environmental protection and the development of society.

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Firms’ sustainability, financial performance, and regulatory dynamics: Evidence from European firms

Cited by 21 publications

References 63 publications

Does ESG reputational risk affect the efficiency and speed of adjustment of corporate investment?

Does ESG reputational risk affect the efficiency and speed of adjustment of corporate investment?

The impact of ESG factors on financial efficiency: An empirical analysis for the selection of sustainable firm portfolios

A Streamline Sustainable Business Performance Reporting Model by an Integrated FinESG Approach

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