The price of environmental, social and governance practice disclosure: An experiment with professional private equity investors

Crifo, Patricia; Forget, Vanina; Teyssier, Sabrina

doi:10.1016/j.jcorpfin.2014.12.006

Cited by 142 publications

(82 citation statements)

References 42 publications

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“…The combination of all ESG dimensions enables many investors to evaluate a firm's risks, opportunities, and transparency, which in turn improves firm value and reduces the COE (Ng & Rezaee, ; Yu, Guo, & Luu, ). Such an effect is more pronounced for lower‐ESG‐disclosure‐performing firms than for higher‐ESG‐disclosure‐performing firms (Crifo, Forget, & Teyssier, ). However, firms with better ESG disclosure have better interaction and communication with stakeholders (Eccles, Ioannou, & Serafeim, ).…”

Section: Results and Analysismentioning

confidence: 99%

“…However, firms with better ESG disclosure have better interaction and communication with stakeholders (Eccles, Ioannou, & Serafeim, ). These firms are likely to disclose their ESG activities and initiatives to signal and differentiate themselves in the capital market from those with lower ESG disclosure ratings (Crifo et al, ). We therefore expect firms with better ESG disclosure scores to strategically use iCarbon more than those with lower ESG disclosure scores.…”

Section: Results and Analysismentioning

confidence: 99%

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The effect of carbon dissemination on cost of equity

2019

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This study examines whether firms can influence their cost of equity (COE) by broadly disseminating their carbon information over Twitter. We study firms' dissemination decisions of carbon information by developing a comprehensive measure of carbon information that a firm makes onTwitter, referred to as iCarbon. Using a sample of 1,737 firmyear observations for 584 nonfinancial firms with aTwitter account and listed on the U.S. NASDAQ stock exchange over the period 2009-2015, we find that iCarbon is significantly and negatively associated with COE. Our results are consistent after determining the effect of Bloomberg's environmental and environmental, social, and governance disclosure. The findings also hold when using alternative measures of COE and iCarbon.

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Section: Results and Analysismentioning

confidence: 99%

Section: Results and Analysismentioning

confidence: 99%

The effect of carbon dissemination on cost of equity

2019

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“…Researchers have also begun to pay more attention to the motivations of institutional investors. External drivers, such as regulatory environment (Sievänen, Rita, & Scholtens, 2013), and internal drivers, such as product development and risk management (Crifo, Forget, & Teyssier, 2015), have been the subject of investigation. However, researchers still have not fully explored in-depth cross-analysis of the behavior of individual and institutional SRI investors.…”

Section: Recent Research Trendsmentioning

confidence: 99%

A systematic literature review of socially responsible investment and environmental social governance metrics

2019

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Socially responsible investment (SRI) encompasses both ethical and financial paradigms. This systematic literature review explores three key research themes within the SRI literature, identifying a significant disconnect between themes and a fixation on the financial (as opposed to ethical) paradigm. One of the foundations of SRI is environmental, social, and governance (ESG) metrics. This review confirms the importance of ESG metrics in the SRI field, as they play two crucial roles, namely, as a proxy for sustainability performance and an enabler of the SRI market. However, there are two main issues related to ESG metrics that undermine their reliability: a lack of transparency and a lack of convergence.

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“…In contrast, Di Giuli and Kostovetsky (), using a sample of 3,000 U.S. firms over the period 2003–2009, provide empirical evidence of a negative correlation between firms' CSR adopted policies, firms' operating performance, and future stock prices. Related to this area of literature, Crifo, Forget, and Teyssier () argue that the relationship between CSR and stock prices as asymmetric, with irresponsible environmental policies decreasing firm price by around 11% compared with responsible environmental policies, which lead to price increases of 5% or so. Their findings are conducive to the idea that CSR has nonlinear or asymmetric implications for company performance.…”

Section: A Brief Review Of the Related Literaturementioning

confidence: 99%

Does doing “good” always translate into doing “well”? An eco‐efficiency perspective

et al. 2019

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Does doing "good" always translate into doing "well"? Debate over the "value" of corporate social responsibility is high on the agenda of corporate finance research.Deeper understanding is required on managers' incentives to pursue and implement corporate social responsibility related strategies, as is more thorough comprehension of the effect of these strategies to firms' performance levels as well as shareholder and wider stakeholder valuations of the firm. This paper provides a new lens by approaching the subject from a different methodological paradigm, grounded in the performance benchmarking methods more commonly applied in operational research.In so doing, we provide novel evidence of the effect of corporate choices on environmental, social, and governance (ESG) strategic investment compliance (i.e., doing good) to firms' eco-efficiency levels (doing well). In brief, our empirical findings suggest that ESG and firm's eco-performance are nonlinearly related. Specifically, advanced ESG policies and disclosure levels are associated with a positive affect to firms' eco-efficiency levels, but only up to a point, after which the effect becomes "neutral," that is, ESG demonstrates a visible pattern of diminishing marginal returns.Thus, we may humbly conclude that a firm may "do well" by doing good, but it is not clear they should ever expect to "do great" just by "doing good." The threshold at which this "neutrality" appears varies systematically with the characteristics of the sector in which the firm is operating, as well as dimensions of board diversity. Finally, it is evident that ESG implementation choices can be a source of managerial agency problems.

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The price of environmental, social and governance practice disclosure: An experiment with professional private equity investors

Cited by 142 publications

References 42 publications

The effect of carbon dissemination on cost of equity

The effect of carbon dissemination on cost of equity

A systematic literature review of socially responsible investment and environmental social governance metrics

Does doing “good” always translate into doing “well”? An eco‐efficiency perspective

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