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This paper aims to investigate the relationship between corporate environmental, social and governance (ESG) ratings and leverage manipulation and the moderating effects of internal and external supervision.

The authors draw on a sample of Chinese non-financial A-share-listed firms from 2013 to 2020 to explore the effect of ESG ratings on leverage manipulation. Robustness and endogeneity tests confirm the validity of the regression results.

ESG ratings inhibit leverage manipulation by improving social reputation, information transparency and financing constraints. This effect is weakened by internal supervision, captured by the ratio of institutional investor ownership, and strengthened by external supervision, captured by the level of marketization. The effect is stronger in non-state-owned firms and firms in non-polluting industries. The governance dimension of ESG exhibits the strongest effect, with comprehensive environmental governance ratings and social governance ratings also suppressing leverage manipulation.

Firms should strive to cultivate environmental awareness, fulfil their social responsibilities and enhance internal governance, which may help to strengthen the firm’s sustainability orientation, mitigate opportunistic behaviours and ultimately contribute to high-quality firm development. The top managers of firms should exercise self-restraint and take the initiative to reduce leverage manipulation by establishing an appropriate governance structure and sustainable business operation system that incorporate environmental and social governance in addition to general governance.

Policymakers and regulators should formulate unified guidelines with comprehensive criteria to improve the scope and quality of ESG information disclosure and provide specific guidance on ESG practice for firms. Investors should incorporate ESG ratings into their investment decision framework to lower their portfolio risk.

This study contributes to the literature in four ways. Firstly, to the best of the authors’ knowledge, it is among the first to show that high ESG ratings may mitigate firms’ opportunistic behaviours. Secondly, it identifies the governance factor of leverage manipulation from the perspective of firms’ subjective sustainability orientation. Thirdly, it demonstrates that the relationship between ESG ratings and leverage manipulation varies with the level of internal and external supervision. Finally, it highlights the importance of governance in guaranteeing the other two dimensions’ roles by decomposing overall ESG.

The purpose of this paper is to investigate the nature and extent of internal audit functions’ (IAFs) involvement in environmental, social and governance assurance (ESG) and consulting in Australia. To identify emerging priorities, and the profession’s capacity to respond to these, the paper also explores internal audit practitioners’ perceptions of the current and future importance of these issues and the adequacy of their skills and expertise in meeting the challenges associated with their involvement in these areas.

Data were collected from 100 Chief Audit Executives and internal audit service provider partners through a survey.

Governance issues are a key area of focus for respondents’ assurance and consulting efforts, followed by social and environmental issues, respectively. While governance issues are perceived to be of greatest current importance to IAFs, environmental issues are most commonly expected to increase in importance over the next five years, and are reported to be in greatest need of further development of IAFs’ skills and expertise.

As the corporate landscape and expectations around transparency and accountability increase, the internal audit profession needs to address the current perceived skills gap in their ability to provide assurance and consulting on ESG issues to ensure their continued relevance and ability to meet stakeholders’ needs and expectations in providing effective integrated assurance and in contributing to internal improvements.

This paper provides initial empirical evidence of the nature and extent of internal audit’s involvement in ESG assurance and consulting.

This paper aims to examine the effects of corporate governance mechanisms (board chairman independence, board independent director meeting attendance, audit committee size and audit committee meetings) on the environmental, social and governance (ESG) and its individual component disclosures of listed firms in Saudi Arabia.

The study used unbalanced panel data obtained from the Bloomberg data set over 11 years, from 2010 to 2020.

The findings indicate that board chairman independence (BCI) and audit committee size (AC size) have a significant negative and positive association with ESG disclosure, respectively. However, the results show that board independent director meeting attendance (BIMA) and audit committee meetings (AC meetings) do not significantly influence ESG disclosure. Regarding the individual dimensions (components), the results show that only BIMA has a significant negative association with environmental disclosure. Besides, only BCI and AC meetings have a significant positive association with social disclosure. Also, only BIMA and AC size have a significant positive and negative relationship with governance disclosure, respectively.

The study used a sample of 29 listed companies in Saudi Arabia. Each firm has at least four years of ESG disclosures. Besides, the paper considered only four corporate governance attributes, comprising two each for the board and audit committee.

The results provide insights to regulators, boards of directors, managers and investors to enhance ESG and its components’ reporting toward the sustainable operations and better performance of Saudi firms.

This study is among the few that provide empirical evidence on how some essential corporate governance attributes that have not been given adequate attention by prior studies (board chairman independence, board independent directors’ meeting attendance, audit committee size and audit committee meetings) influence not only ESG reporting as a whole but also its individual dimensions (components).

This research study examines the impact of social and governance initiatives on financial performance of global banks. The study is significant in the context of massive changes in regulations, government policy, social attitudes and market development attributed to banking sector.

The source of data for this study was ESG database of Thomson Reuters. The study was based on 472 global banks. The research paper uses two-stage least square model and the study covered the five-year period 2015–2019.

Banks with high intensity of social and governance-related activities have positive market-based valuation effects. Adequately capitalized banks tend to invest more in social initiatives. Banks' governance initiatives directed toward the use of anti-takeover defensive mechanisms are skeptically perceived by markets. Riskier banks tend to have less investments in social initiatives.

The findings are relevant in the context of expectations from policymakers, consumers and investors with respect to the role which banks ought to play in funding the development of a sustainable economy. The research finding that strong governance and social initiatives by banks are value-enhancing measures is a clear evidence of the significance of ESG initiatives as value-creating mechanisms as perceived by markets.

This study addresses the gap in the research, which examines the role of governance and social initiatives on value creation in the banking sector firms. The study examines the impact of different elements of governance and social initiatives on financial performance of banks.

Growing social concerns and ecological issues accelerate firms’ environmental, social and governance (ESG) engagement. Hence, this study aims to advance the existing literature by focusing on the interplay between institutional and firm governance mechanisms for greater ESG engagement. More specifically, the authors investigate whether public governance stimulates excessive ESG engagement and whether corporate governance moderates this relationship.

Using a sample of 43,803 firm-year observations affiliated with 41 countries and 9 industries, the authors adopt a country, industry and year fixed-effects regression analysis.

The authors find that public governance strength via its six dimensions stimulates excessive ESG engagement. This implies that firms in countries with strong voice and accountability, political stability, government effectiveness, regulatory quality, rule of law and control of corruption are more motivated for ESG engagement. Furthermore, corporate governance negatively moderates the relationship between all public governance dimensions (except political stability) and excessive ESG engagement. This implies that public governance and corporate governance are substitutes for encouraging firms to commit to ESG. Further tests reveal that whereas these results in the baseline analyses are valid for developed countries, they are not valid in emerging markets.

The findings support the interplay between institutional and agency theories. In countries with strong (weak) institutional mechanisms, corporate governance becomes weak (strong) in inciting greater stakeholder engagement. This implies that the public governance mechanism alleviates agency costs, rendering internal mechanisms of corporate governance noncompulsory for ESG engagement.

The findings suggest that emerging countries need to reinforce their institutions for greater accountability, regulatory quality and control of corruption, which will have a domino effect on firms in addressing stakeholder expectations. The results also advise emerging country firms to augment their internal monitoring mechanisms for greater stakeholder engagement, such as structuring boards and establishing corporate social responsibility mechanisms, committees and policies.

This study contributes to the recent literature investigating the role of corporate governance mechanisms in excessive ESG engagement. The study also explores whether public governance is associated with greater ESG involvement and provides a comprehensive analysis of the association between six indicators of public governance quality and excessive ESG practices in developed and emerging economies.

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.

Recent regulatory changes in Europe have promoted non-financial reporting practices (e.g., Directive, 2014/95/EU) and gender diversity in decision-making positions. Special attention is devoted to promoting the gender balance on corporate boards as a key mechanism to enhance corporate governance effectiveness and better address multiple stakeholders' needs. With this in mind, this study intends to examine the impact of boardroom gender diversity on Environmental Social Governance (ESG) disclosure practices in the European listed firms' context.

The study applies different panel data models on an extended sample of 1,392 firms from 21 European Union (EU) countries for six years (2014–2019).

Findings allow to spotlight the positive role exerted by the presence of women directors on the boards in enhancing ESG disclosure, both at the overall and specific (individual ESG scores) level.

Policymakers and regulators might consider the study's evidence as a stimulus to continue in promoting strategic actions and reforms that foster gender equality and balance in corporate decision-making positions.

Creating a heterogeneous and diversified board of directors may support implementing a “sustainable corporate governance” recently claimed by the EC.

The study contributes to the literature by disentangling the links between gender diversity and ESG disclosure over a period that covers a long season of European regulations and measures that affected both non-financial reporting practices and the board of directors' composition. Accordingly, it can contribute to enhancing the practical and theoretical understanding of the pivotal role that gender diversity may exert in strengthening corporate governance and, in turn, corporate transparency and accountability behaviours about non-financial issues.

This paper aims to examine the impact of environmental, social and governance (ESG) disclosure and firm value (FV), as well as, pinpoints the role of the audit quality (AQ) as a moderating variable on such impact; where the authors hypothesize that AQ modulates the relationship between ESG disclosure and the FV.

Data of a sample of firms listed on the Egyptian Stock Exchange Market (EGX) were collected over the period of 2017–2021 and analyzed using the regression and 2SLS models.

The results suggested that: (1) the ESG has a significant positive impact on the FV in the EGX, and (2) AQ has a significant impact, as a moderating variable, on the relationship between ESG disclosure and FV.

The findings would help the Egyptian market authorities in realizing the importance of integrating ESG information within the financial reports of the listed firms. The findings could also help in developing effective disclosure procedures to provide shareholders with useful information.

This paper contributes to the literature regarding the ESG disclosure components and the FV value by considering AQ in testing such relationship.

This study aims to examine the potential disparities in environmental, social and governance (ESG) reporting among emerging Chinese enterprises (ECEs). ECEs are subject to a set of internationally oriented ESG requirements imposed by the regulator of a global financial center that is exposed to diverse stakeholders. The authors also consider ECEs’ underlying institutional ownership, which exhibits influence over governance as a salient component of ESG.

This study is based on a random sample of 500 ECEs listed on the Stock Exchange of Hong Kong (SEHK) – the global financial center of China. ESG reporting is measured by using the key performance indicators of the SEHK’s ESG Reporting Guide. The data are collected from annual reports that contain ESG disclosures or standalone ESG/sustainability reports published during the 2018–2019 fiscal year. The authors adopt binary logistic regressions and Chi-square tests to test the proposed hypotheses.

The authors find that ECEs’ heterogeneous institutional ownership and the extent of overseas development are associated with their disclosures on climate change. ECEs with international institutional ownership are found to be a significant factor for reporting aligned with the United Nations sustainable development goals (SDGs), using external assurance and stakeholder engagement, rather than state-owned enterprises (SOEs) and private companies. The authors also document that the presence of independent nonexecutive directors (INEDs) is significantly associated with reporting on meeting the SDGs and its use of external assurance, while the presence of female directors is a significant factor influencing disclosure emphasis on energy-saving initiatives.

The authors provide an empirical study of ECEs beyond the focus on SOEs that are expected to produce comprehensive ESG reporting in addressing a broader international community of stakeholders apart from the regime of their home country. The authors document the pertinence of ECEs’ institutional ownership and governance diversity to ESG reporting. In particular, international stakeholders need to recognize such underlying differences among ECEs rather than viewing them as a homogeneous group.

The authors suggest that policymakers and practitioners in Asian countries consider increasing the presence of INEDs and gender diversity on ECE boards to enhance ESG reporting, which reinforces the findings of prior international studies suggesting such governance practices.

This study contributes to the existing body of knowledge about ESG reporting by documenting the underlying heterogeneity within ECEs, which are subject to a set of internationally oriented standards, as evidenced by their disparities in ESG reporting.

This is an acceptable fact that firms put efforts to maximize shareholders wealth but there is growing demand that firms are also accountable to various stakeholders associated directly or indirectly with the firms' business activities. Investors now evaluate firm's performance not only from financial perspective but also consider environment, social, and governance (ESG) factors when taking investment decision. ESG is not visible in firm's annual financial reports but investors do not deny its significance when valuing firms. There are increasing interests in ESG by communities, professionals, and government bodies, and all are interested to keep it as part of firms' regular activity and have to relate it with firm performance and efficiency that affects firm value. Still, there are difficulties in integration of ESG factors into investment decision-making, but efforts are being put to overcome all the issues. Firms which consider ESG are in a good position to achieve their long-term financial goals as they are likely to attract capital, lower borrowing costs, mitigate risks, and maximize shareholders value.