Search results

The purpose of this paper is to investigate the relationship between corporate social responsibility (CSR) and earnings quality, as proxied by accrual earnings management, in Egyptian firms. This research is conducted in a bidirectional fashion using simultaneous equations and considers two theoretical perspectives.

The study employs CSR annual scores from the Egyptian environmental, social and governance index (S&P/ESG index) for the 100 highest scoring firms from 2007 to 2015. It utilizes three earnings quality measures, in addition to considering reverse causality and endogeneity.

The results indicate that CSR has a positive association with earnings quality only in the top CSR scoring firms (top 30 ranked firms according to the index). Engaging in CSR in such firms enhances the quality of their earnings. This suggests that firms with relatively lower CSR scores (bottom 70 ranked firms according to the index) may use CSR to “greenwash” weaker earnings.

The findings suggest that researchers, analysts and policy makers should consider earnings quality when estimating the real value of a firm’s CSR score. In particular, the Egyptian S&P/ESG index committee could further develop the index by incorporating earnings quality measures.

The study contributes to the literature by exploring in-depth the causal relationship between CSR practices and accrual earnings management in an emerging market. The results provide a nuanced story of CSR practices, with accruals earnings management (earnings quality) acting as a mediator of CSR’s inherent value.

This paper aims to examine the time-varying preferences for environment, social and corporate governance (ESG) investing in an emerging market. The investors seek ESG-conscious investments during a positive economic outlook, reflecting the time-varying nature of ESG demand. Specifically, the author shows that high-ESG stocks have negative abnormal returns during bad economic times but turn into positive abnormal returns in good economic times. The author also suggests that the alpha spread between high-ESG and low-ESG stocks is larger in good economic times than in bad times. Furthermore, individual investors prefer high ESG scoring stocks in good economic times. The author highlights that this ESG premium is shaped by economic projection and the households' financial wealth.

The present digital era has integrated the conventional telecommunications companies as service providers in this ever-competitive environment. Towards gaining business competitiveness, businesses are operated from the stance of dynamic business model that places focus on both economic activities and, more importantly, value-added benefits. One essential value embedded into business strategies refers to the aspect of sustainability in conjunction to environmental social governance (ESG). Within the context of Malaysia, ESG practices have been expected to grow rapidly in years to come, along with the vision of becoming a digital economy nation, by 2050. The continuous discussions appear to support the significance of implementing ESG practices amidst organizations, which in turn, could enhance a more sustainable economic growth for the country. Although many studies have probed into the dimensions of ESG, little attention has been given to the ESG practices incorporated into business strategy agenda.

This paper combed through the literature to retrieve the multi-dimensions of ESG concepts, as well as related in-depth insights into ESG disclosures amongst leading companies established in Malaysia. As for the research design, this study used the content analysis method and the ESG Grid as the benchmarking tool to explore superior commitments amongst its peers.

As a result, this study stumbled upon two major outcomes: the pattern of ESG disclosures in telecommunications industry and the approaches in implementing ESG practices in telecommunications companies. These two aspects appear essential to establish a competitive advantage, apart from addressing the issues raised by concerned stakeholders.

Future studies may explore deeper into comprehending the ESG practices by using the interview method and incorporating other industry or arena.

The decisions made by the companies to invest in ESG practices mark the ability of a company in devising viable survival strategies within the industry.

Hence, this study offers several vital insights into the practical value to learn from the best experiences, aside from analyzing the current progress of ESG practices within the context of developing nation.

In this paper, the authors tested if promoting the workforce's happiness (through high performance work policies or HPWP) and well-being in European Public companies relates to their profitability (return on equity, ROE), market risk (beta) and stock price return. Also, the authors tested if investors have a performance benefit if they buy a portfolio screened with companies with HPWP.

The authors proxied the quality of the HPWP efforts in the first method with the Refinitiv workforce score. They used this data in an unbalanced panel of eastern, western, northern and southern Europe companies from 2011 to 2022. The panel data also included the ROE, the market risk (beta) and the stock price return of these companies. The authors estimated the corresponding regressions with the panel data and tested the relationship between the workforce score and these three variables. In a second method, they simulated the weekly performance of a portfolio that invested only in European companies with high standards in their HPWP and compared its performance against a conventional market portfolio (with no HPWP screening).

In the first method, the authors found no significant relationship between the workforce score and the ROE, beta, or stock price return in the panel regression, controlling for random effects. In the second one, they found no over or underperformance in the HPWP portfolio against the European market one in the second method.

The results suggest that there is no risk or cost for European Public companies and investors alike if they promote, with better HPWP, the happiness and well-being of their workforce. The findings suggest that if European companies promote HPWP, there will be no adverse impact on their profits, market risk, or stock price performance. Also, investors will not lose performance (against a conventional market portfolio) if they screen their portfolios with this type of workforce-friendly companies.

Increase the scarce literature on the test of the workforce score with company profitability (ROE), stock market price variation and stock market risk level.

A company's overall success and resilience in the market is increasingly linked to its Environmental, Social, and Governance (ESG) performance. Following a brief review of sustainable development and corporate sustainability, the concept and rationale behind ESG is discussed with an emphasis on the criteria and limitations of ESG scores. ESG matters are mostly limited to global hotel chains but critical to an entire industry that seeks to decarbonize its operations until 2050 while also tackling the Sustainable Development Goals (SDGs). There is a potential misalignment of the ESG criteria to achieve the ambitious SDGs based on the narrow, environmentally based view on sustainability in the hotel sector. A set of recommendations is designed to align the SDGs to ESG requirements and expectations supported by industry examples within the context of the COVID-19 pandemic and resiliency imperative.

This study aims to examine the impact of sustainable practices as proxied by the environmental, social and governance (ESG) score on capital structure. It also investigates whether ESG performance influences the speed of adjustment (SOA) to target leverage in firms.

The sample covers 116 non-financial firms listed on the main stock exchanges from five Southeast ASEAN countries (Bursa Malaysia, Indonesia Stock Exchange, Philippines Stock Exchange, Singapore Stock Exchange and Stock Exchange of Thailand) over the period 2012–2019. The study adopts the OLS regression and system-GMM estimators to perform the data analysis.

The authors show that the ESG score is positively associated with book leverage, suggesting that firms increase their debt capital through sustainable practices. However, they find that the ESG score is negatively associated with market leverage across our model estimations. The authors also reveal that environmental, social and governance pillar scores produce about 7.82%, 2.88% and 0.47% SOAs, respectively, higher than the SOA of the traditional SOA without the ESG factor. The aggregate ESG score has about 3.41% SOA higher than the baseline SOA without the ESG factor.

This study is of interest to investors, corporate firms and policymakers. The study demonstrates that the ESG score increases the firm’s SOA to target leverage. By disaggregating the ESG score, the authors establish that ESG pillar scores produce higher SOAs than the traditional SOA (without ESG), with the environmental score inducing the fastest SOA. Practically, the study implies that environmentally sustainable activities reduce environmental transaction costs, benefit firms through better information transparency and enhance a trustful climate between the firm and suppliers of capital. Therefore, this study demonstrates that firms do not only incur the cost of disseminating ESG information but also benefit from lower information asymmetry and a higher SOA with better tax-deductible advantages.

The findings have combined advantages for both stakeholders and directors who monitor and manage the firms’ resources to improve the quality of ESG practices and initiatives.

To the best of the authors’ knowledge, this study is among the first to establish that sustainable practices induce higher debt capital. Secondly, unlike prior research focusing on the cost of capital, the authors examine whether ESG performance affects capital structure patterns. Thirdly, it documents the extent to which sustainable practices influence the SOA towards target leverage in firms. The authors contribute to corporate finance literature that firms reach faster to their target leverage in the presence of ESG performance. Theoretically, through the notion of the stakeholder proposition, the study establishes that the firms’ pursuance of stakeholder goals further enhances the prediction of the trade-off theory.

This study investigates the influence of social trust on the attainment of corporate environmental, social and governance (ESG) objectives.

This study conducts panel regression analysis on a distinctive dataset for 2009–2017 on Chinese firms.

The analysis reveals a significant positive association between social trust and firm-level ESG practices. Moreover, the impact of social trust on shaping ESG outcomes is further amplified by factors such as economic growth, corporate governance standards and institutional quality. This relationship remains statistically positive when the authors employ alternative measures and methodologies, such as the instrumental variables, propensity score matching and difference-in-differences approaches. Notably, the results of heterogeneity tests indicate that the Trust–ESG nexus is more prominent for state-owned enterprises and firms with substantial market capitalization, superior profitability and higher leverage.

This study expands the comprehension of the determinants of ESG and underscores the influential role of social trust as an informal institution in enhancing a firm's ESG performance.

This study investigates the impact of environmental, social and governance (ESG) disclosure on firm financial performance under a mandatory disclosure regime in Hong Kong.

The authors examine the largest 109 firms listed on the Hong Kong Exchange (HKEX) as of the financial year of 2019. The authors use a manually constructed index based on the most current 2019 ESG Reporting Guide launched by HKEX, followed by quantitative statistical methods using a model that follows the valuation framework by Ohlson.

The authors find a significant positive association between total ESG disclosure level and firm financial performance in the main tests. However, when the total ESG scores are partitioned into environmental and social subscores, the results show that only social disclosures are value relevant. Moreover, the results demonstrate that environmental and social subscores are both significant when return on assets (ROA) is used as a dependent variable. Furthermore, the robustness tests show that only qualitative ESG information is value relevant to share prices, while both quantitative and qualitative ESG information are relevant to ROA. In addition, the disclosure quality of annual reports alone is good in explaining the firm financial performance in this study.

This study contributes to existing non-financial reporting literature using hand-collected data as well as examining the firm financial performance of ESG reporting under the mandatory disclosure regime in the Hong Kong context.

With the increasing understanding of stakeholders on sustainability aspects for the business, companies are nowadays paying more attention to environmental and social issues. This study aims to examine the relationship between Environmental, Social, Governance (ESG) Index and firms’ value. Moreover, this study also examines how the controversy score influences the company’s value. The authors employ a dataset of 1.356 companies from 22 countries in Asia which representing the Asian market from 2014 to 2018. This study shows that ESG index score and controversy score are statistically significant, affecting the firms’ value, measured by Tobin’s Q. From the individual tests, the findings of this study indicate that ESG-environmental, ESG-social, and ESG-governance, individually affect the firms’ value. This study suggests that providing disclosure on ESG aspects is essential, not only to increase company value but also to show the company resilience and sustainability. On the other hand, ESG controversy score surprisingly indicates a positive relationship with the company value. The result implies that controversies provide a positive signal to the investor because controversies could provide a signal to the public of companies’ willingness to have transparency and accountability.