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The financial and market consequences of environmental, social and governance ratings: The implications of recent political volatility in Egypt

Ahmed Aboud (Portsmouth Business School, University of Portsmouth, Portsmouth, UK and Faculty of Commerce, Beni-Suef University, Beni Suef, Egypt)
Ahmed Diab (Beni-Suef University, Beni Suef, Egypt)

Sustainability Accounting, Management and Policy Journal

ISSN: 2040-8021

Article publication date: 10 June 2019

Issue publication date: 9 July 2019




This study aims to examine the combined impact of environmental, social and governance (ESG) ratings on the market and financial performance of Egyptian companies during the period from 2007 to 2016 and, thereby, determines the influence of the recent political revolutions –that broke out in the MENA region in early 2011 – on the association between ESG practices and corporate performance.


The present work uses data from the S&P/EGX ESG index, which is the first of its kind in the MENA region. The ESG index is designed to increase the profile of companies listed on the Egyptian Exchange and is expected to boost the level and quality of ESG practices in the Egyptian context. The sample includes the 100 most active Egyptian companies in the Egyptian Stock Exchange as measured by the EGX 100 index in the financial year that ended in 2016. The sample begins in 2007, concurrent with the start of the ESG index, and ends in 2016. The period from 2007 to 2010 represents the pre-revolution period, and the period from 2012 to 2016 is the post-revolution period.


Firms with high ESG ratings are found to enjoy a better financial and market performance. The authors found some evidence that the influence of ESG ratings on financial performance is more obvious after the revolutions than before the revolutions.

Practical implications

This study provides insights regarding the impact of political events on the market in the Middle East region. Despite its increasing economic and political importance, this region still suffers from inadequate attention in the literature. The present work investigates the variances that evolved out of the events that started in early 2011 and the implications of these events on the market. The results of this study have implications for regulators and investors in the Egyptian stock market. The authors believe that the relatively new S&P/EGX ESG index provides a way to enhance ESG ratings in Egypt.

Social implications

The results of the present study provide insights for policymakers regarding the usefulness of the sustainability indices.


The present results contribute to the growing literature on the economic consequences of ESG ratings, especially in relation to a context characterized by intense political/revolutionary changes. In particular, this study contributes to the few works that have addressed the economic implications of ESG ratings in emerging markets.



Aboud, A. and Diab, A. (2019), "The financial and market consequences of environmental, social and governance ratings: The implications of recent political volatility in Egypt", Sustainability Accounting, Management and Policy Journal, Vol. 10 No. 3, pp. 498-520.



Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

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