Corporate controversies and market-to-book: the moderating role of ESG practices

• Autores: Caroline Keidann Soschinski, Sady Mazzioni, Cristian Baú dal Magro, Maurício Leite
• Localización: RBGN: Revista Brasileira de Gestão de Negócios, ISSN 1806-4892, Vol. 26, Nº. 1, 2024, págs. 1-18
• Idioma: inglés
• DOI: 10.7819/rbgn.v26i01.4255
• Enlaces
  • Texto completo (pdf)
• Resumen

  • Purpose – The aim of this study is to analyze the moderating role of ESG practices in the relationship between corporate controversies and companies’ market-tobook performance.

    Theoretical framework – ESG effect, ESG controversies and market performance.

    Design/methodology/approach – We investigated 3,267 companies from 20 countries with the highest GDP in 2021. ESG ratings and other variables were collected from the Refinitiv database. The cross-country analysis considered panel data regressions with fixed effects by year, industry and country from 2016 to 2020.

    Findings – The results showed that corporate controversies have a negative effect on companies’ market performance, while engagement in ESG practices has a positive effect. However, when analyzing the relationship between corporate controversies and market-to-book value in companies with high ESG ratings, the negative effect of controversies is not significant.

    Practical & social implications of research – This research contributes by indicating the negative consequences of corporate controversies in terms of market performance and signaling that ESG practices are important to meet the needs of stakeholders, but are not enough to mitigate the impact of ESG controversies on market performance.

    Originality/value – To the best of our knowledge, this is the first paper to demonstrate that ESG practices are not strong enough to mitigate the negative effects of ESG controversies on market performance in a large sample.

• Referencias bibliográficas
  • Aboud, A., & Diab, A. (2018). The impact of social, environmental and corporate governance disclosures on firm value: Evidence from Egypt....
  • Aguilera, R. V., Rupp, D. E., Williams, C. A., & Ganapathi, J. (2007). Putting the S back in corporate social responsibility: A multilevel...
  • Alakent, E., & Ozer, M. (2014). Can companies buy legitimacy? Using corporate political strategies to offset negative corporate social...
  • Antoncic, M., Bekaert, G., Rothenberg, R. V., & Noguer, M. (2020). Sustainable Investment-Exploring the Linkage between Alpha, ESG, and...
  • Bofinger, Y., Heyden, K. J., & Rock, B. (2022). Corporate social responsibility and market efficiency: Evidence from ESG and misvaluation...
  • Brinette, S., Sonmez, F. D., & Tournus, P. S. (2023). ESG controversies and firm value: Moderating role of board gender diversity and...
  • Brooks, C., & Oikonomou, I. (2018). The effects of environmental, social and governance disclosures and performance on firm value: A review...
  • Carroll, A. B. (1979). A three-dimensional conceptual model of corporate performance. Academy of Management Review, 4(4), 497-505. http://dx.doi.org/10.2307/257850.
  • Chantziaras, A., Dedoulis, E., Grougiou, V., & Leventis, S. (2020). The impact of religiosity and corruption on CSR reporting: The case...
  • Chen, S., Song, Y., & Gao, P. (2023). Environmental, social, and governance (ESG) performance and financial outcomes: Analyzing the impact...
  • Chollet, P., & Sandwidi, B. W. (2018). CSR engagement and financial risk: A virtuous circle? International evidence. Global Finance Journal,...
  • DasGupta, R., & Roy, A. (2023). Moderation impact of national culture on international firm’s environmental, social, governance and financial...
  • De La Fuente, G., Ortiz, M., & Velasco, P. (2022). The value of a firm’s engagement in ESG practices: Are we looking at the right side?...
  • Dorfleitner, G., Pons, D., & Renier, N. (2023). 14. An investor’s perspective on measuring and managing social performance and impact....
  • Eliwa, Y., Aboud, A., & Saleh, A. (2021). ESG practices and the cost of debt: Evidence from EU countries. Critical Perspectives on Accounting,...
  • Fatemi, A., Glaum, M., & Kaiser, S. (2018). ESG performance and firm value: The moderating role of disclosure. Global Finance Journal,...
  • Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge University Press.. http://dx.doi. org/10.1017/CBO9781139192675.
  • Freeman, R. E., & McVea, J. (2001). A stakeholder approach to strategic management. In M. A. Hitt, R. E. Freeman, J. S. Harrison (Eds.),...
  • Garcia, A., Mendes-da-Silva, W., & Orsato, R. J. (2017). Sensitive industries produce better ESG performance: Evidence from emerging markets....
  • Gillan, S. L. (2006). Recent developments in corporate governance: An overview. Journal of Corporate Finance, 12(1), 381-402. http://dx.doi.org/10.1016/j.jcorpfin.2005.11.002.
  • Grassmann, M. (2021). The relationship between corporate social responsibility expenditures and firm value: The moderating role of integrated...
  • Hyz, A. B., & Sahinidis, A. (2018). Stakeholder prioritizing in the midst of an economic crisis: A multi-firm, multi-sector study. Central...
  • Janney, J. J., & Gove, S. (2011). Reputation and corporate social responsibility aberrations, trends, and hypocrisy: Reactions to firm...
  • Jasinenko, A., Christandl, F., & Meynhardt, T. (2020). Justified by ideology: Why conservatives care less about corporate social irresponsibility....
  • R. Bras. Gest. Neg., São Paulo, v.26, n.1, e20230115, 2024 Caroline Keidann Soschinski / Sady Mazzioni / Cristian Baú Dal Magro / Maurício...
  • Kim, K. H., Kim, M., & Qian, C. (2018). Effects of corporate social responsibility on corporate financial performance: A competitive-action...
  • Klein, J., & Dawar, N. (2004). Corporate social responsibility and consumers’ attributions and brand evaluations in a product–harm crisis....
  • Kraus, S., Rehman, S. U., & García, F. J. S. (2020). Corporate social responsibility and environmental performance: The mediating role...
  • Krüger, P. (2014). Corporate goodness and shareholder wealth. Journal of Financial Economics, 115(2), 304-329. http://dx.doi.org/10.1016/j.jfineco.2014.09.008.
  • La Rosa, F., & Bernini, F. (2022). ESG controversies and the cost of equity capital of European listed companies: The moderating effects...
  • Li, J., Haider, Z. A., Jin, X., & Yuan, W. (2019). Corporate controversy, social responsibility and market performance: International...
  • Liu, M. T., Wong, I. A., Shi, G., Chu, R., & L. Brock, J. ((2014). The impact of corporate social responsibility (CSR) performance and...
  • Luo, W., Guo, X., Zhong, S., & Wang, J. (2019). Environmental information disclosure quality, media attention and debt financing costs:...
  • Martín-de Castro, G. (2021). Exploring the market side of corporate environmentalism: Reputation, legitimacy and stakeholders’ engagement....
  • Mascena, K. M. C. D., Fischmann, A. A., & Boaventura, J. M. G. (2018). Stakeholder prioritization in Brazilian companies disclosing GRI...
  • Melinda, A., & Wardhani, R. (2020). The effect of environmental, social, governance, and controversies on firms’ value: Evidence from...
  • Nirino, N., Santoro, G., Miglietta, N., & Quaglia, R. (2021). Corporate controversies and company’s financial performance: Exploring the...
  • Orlitzky, M. (2013). Corporate social responsibility, noise, and stock market volatility. The Academy of Management Perspectives, 27(3), 238-254....
  • Palupi, A. (2023). Does ESG affect the firm value? Accounting & Finance Review, 7(4), 19-26. http://dx.doi. org/10.35609/afr.2023.7.4(3).
  • Park, J., Lee, H., & Kim, C. (2014). Corporate social responsibilities, consumer trust and corporate reputation: South Korean consumers’...
  • Passas, I., Ragazou, K., Zafeiriou, E., Garefalakis, A., & Zopounidis, C. (2022). ESG controversies: A quantitative and qualitative analysis...
  • Porter, M. E., & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard Business Review,...
  • Refinitiv Eikon. (2022). ESG Scores. https://www.refinitiv. com/pt/sustainable-finance/esg-scores Rettab,
  • B., Brik, A. B., & Mellahi, K. (2009). A study of management perceptions of the impact of corporate social responsibility on organizational...
  • Sánchez-Infante Hernández, J. P., Yañez-Araque, B., & Moreno-García, J. (2020). Moderating effect of firm size on the influence of corporate...
  • Shin, J., Moon, J. J., & Kang, J. (2022). Where does ESG pay? The role of national culture in moderating the relationship between ESG...
  • Shobhwani, K., & Lodha, S. (2023). Impact of ESG risk scores on firm performance: An empirical analysis of NSE-100 companies. Asia-Pacific...
  • Uyar, A., Karaman, A. S., & Kilic, M. (2020). Is corporate social responsibility reporting a tool of signaling or greenwashing? Evidence...
  • Velte, P. (2017). Does ESG performance have an impact on financial performance? Evidence from Germany. Journal of Global Responsibility, 8(2),...
  • Wang, Z., & Sarkis, J. (2017). Corporate social responsibility governance, outcomes, and financial performance. Journal of Cleaner Production,...
  • Wong, J. B., & Zhang, Q. (2022). Stock market reactions to adverse ESG disclosure via media channels. The British Accounting Review, 54(1),...
  • Wu, C. M., & Hu, J. L. (2019). Can CSR reduce stock price crash risk? Evidence from China’s energy industry. Energy Policy, 128, 505-518....
  • Ye, L., & Hu, H. W. (2022). Investor reactions to corporate misconduct: The moderating role of firm reputation. Proceedings - Academy...
  • Yu, E. P. Y., Guo, C. Q., & Luu, B. V. (2018). Environmental, social and governance transparency and firm value. Business Strategy and...
  • Yuan, X., Li, Z., Xu, J., & Shang, L. (2022). ESG disclosure and corporate financial irregularities: Evidence from Chinese listed firms....