The<scp>concave–convex</scp>effects of environmental, social and governance on<scp>high‐tech</scp>firm value: Quantile regression approach

Wu, Kun‐Shan; Chang, Bao‐Guang

doi:10.1002/csr.2289

Cited by 19 publications

(10 citation statements)

References 63 publications

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“…Second, the results confirm that the ESGE-CFP relationship also has an inverted U-shaped pattern, which is justified by the law of diminishing marginal returns (LDMR). This finding supports the TMGT perspective and agrees with the contentions of Lahouel et al (2022), and Wu and Chang (2022). The optimal ESGE value is 43.049 (Table 3; Figure 4B) and is higher than the average ESGE value (32.747), which suggests that most TSE listed firms are in the ESG-low regime.…”

Section: Discussionsupporting

confidence: 86%

“…First, the results confirm an inverted U-shaped ESG-CFP relationship, which infers TSE listed enterprise managers must be conscious of diminishing marginal benefits on increased ESG activity as beyond the threshold point, resources would be more effective if reallocated away from ESG activities. Equally, these findings support the "too-much-of-a-good-thing (TMGT)" perspective (Trumpp & Guenther, 2017), and consistent with the contentions of Azmi et al (2021), Wu and Chang (2022).…”

Section: Discussionsupporting

confidence: 82%

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Too little or too much? Exploring the inverted U-shaped nexus between voluntary environmental, social and governance and corporate financial performance

Teng

et al. 2022

Front. Environ. Sci.

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This study aims to examine the nonlinear relationship between environmental, social and governance (ESG) and corporate financial performance (CFP) using Taiwan Stock Exchange (TSE) listed firms with ESG disclosure between 2005 and 2019. The pooled ordinary least square (OLS) regression estimation results indicate the ESG-CFP nexus is a nonlinear (inverted U-shaped pattern). Furthermore, the individual ESG pillars each have a different relationship with CFP. Both the environmental and social pillars have an inverted U-shaped relationship with CFP, whereas there is no significant relationship between the governance pillar and CFP. The concave nonlinear relationship also supports the tenets of the “too-much-of-a-good-thing” effect. This research confirms that TSE listed firms should identify the optimal ESG value (threshold point), where ESG costs and benefits balance, to maintain sustainable development and stakeholder engagement.

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Section: Discussionsupporting

confidence: 86%

Section: Discussionsupporting

confidence: 82%

Too little or too much? Exploring the inverted U-shaped nexus between voluntary environmental, social and governance and corporate financial performance

Teng

et al. 2022

Front. Environ. Sci.

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“…This result supports H1. In the existing literature, despite the lack of direct evidence of national ESG performance, researchers have confirmed that, compared with the unified conclusion of fixed effects, the quantile approach shows that ESG performance has a differentiated impact on enterprises with different values (Wu & Chang, 2022; Zhang et al, 2020), sustainable development capabilities (Teng et al, 2021), and scales (Gregory, 2022). Therefore, we believe that panel fixed effects are flawed in characterizing the impact of national ESG performance on green innovation.…”

Section: Resultsmentioning

confidence: 99%

ESG performance and green innovation: An investigation based on quantile regression

et al. 2023

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Using panel data from 37 countries from 1990 to 2019 and applying a quantile regression approach with panel fixed effects, we investigate the impact of national Environmental, Social, and Governance (ESG) performance on green innovation and how this impact varies across different green innovation capacity distributions. The research conclusions are as follows. (1) National ESG performance improvement significantly promotes green innovation. (2) The improvement of environmental performance and governance performance significantly promotes green innovation, but in countries with weak green innovation capabilities, the improvement of social performance reduces the output of green innovation. (3) The role of national ESG performance in promoting green innovation is stronger in countries with weak green innovation capabilities. (4) In non‐high‐income countries, the stronger the green innovation capability is, the more obvious is the promotion of ESG performance to green innovation. The findings of this paper provide empirical evidence and a policy basis for governments to focus on improving ESG performance and to commit to promoting green innovation activities more effectively.

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“…Their findings signal a nonlinear relationship between the two. Therefore, a balance between ESG benefits and costs must be maintained by finding a certain level of ESG (Yu et al, 2018;Wu and Chang, 2022). Hence, the nonlinear connectivity also needs to be explored to find how ESG associates with a firm's value to a certain level (Yu et al, 2018;Wu and Chang, 2022).…”

Section: Literature Review Theoretic Agenda and Hypotheses Formulatio...mentioning

confidence: 99%

Firm's value and ESG: the moderating role of ownership concentration and corporate disclosures

Rastogi

Singh

Kanoujiya

2023

ARA

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PurposeThe study intends to determine the environment, social and governance (ESG)'s impact on the firm's value. In addition, how ownership concentration (OC) and transparency and disclosures (TD) influence the impact of firm's ESG on its valuation (firm value).Design/methodology/approachThe relevant panel data with a sample of 78 Indian firms for five years (2016–2020) are gathered. Both linear and nonlinear connections of firm's ESG with its value are tested. In addition, TD and two components of OC (stakes of promoters and institutional investors) are empirically tested as moderators on the connectivity of the firm's ESG with its value.FindingsThe linear association of firm's ESG with its value is found insignificant. ESG is found to have a positive and nonlinear (U-shaped) impact on the value of the firms. TD does not moderate the connectivity of firm's ESG with its valuation (firm value). The higher stakes of promoters positively affect the association of firm's ESG with the valuation. However, the high stakes of institutional investors retard the ESG's influence on the firm value.Research limitations/implicationsThe study is on Indian firms for five years. A sample of more than one nation and a longer duration (10 years) could have helped better determine the associations among the variables. In turn, these limitations can be the present study's future scope. In addition, the authors find a lack of standardisation of the ESG scales, which is a problem in measuring it. Using standardisation scales of ESG for the analysis can also be future scope on the topic.Practical implicationsThe investors would be wary of the level of ESG to influence the firms' value positively. Managers also need to be careful to have sincere efforts for ESG to reap its rich dividends. Policymakers may take cognisance that despite having board seats (in a few cases), institutional investors negatively (instead of positively as expected) influences the ESG's association with the firm's value. They may bring some guidelines or legislative changes to fix responsibility on the part of the institutional investors.Originality/valueNo study reports the linear and nonlinear association of ESG on the firm's value to observe clearer connectivity between the two. Similarly, no study is observed to have promoters and institutional investors as moderators on the association of firm's ESG with the valuation (firm value). Hence, the present study considerably augments the extant literature on the topic and its contribution.

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Theconcave–convexeffects of environmental, social and governance onhigh‐techfirm value: Quantile regression approach

Cited by 19 publications

References 63 publications

Too little or too much? Exploring the inverted U-shaped nexus between voluntary environmental, social and governance and corporate financial performance

Too little or too much? Exploring the inverted U-shaped nexus between voluntary environmental, social and governance and corporate financial performance

ESG performance and green innovation: An investigation based on quantile regression

Firm's value and ESG: the moderating role of ownership concentration and corporate disclosures

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