EVIDÊNCIAS SOBRE PRÁTICAS AMBIENTAIS, SOCIAIS E DE GOVERNANÇA ASSOCIADAS AO CUSTO DE CAPITAL NO MERCADO DE CAPITAIS NOS PAÍSES DO G20

This study investigates the relationships between sustainable human capital management practices, ESG performance, ESG disclosure, and firm financial performance. Using a sample of 387 S&P 500 firms from 2013 to 2023 and a panel data regression approach, we examine the impact of training expenditure, workforce diversity and inclusion, pay equity, and employee benefits on ESG performance. We also explore the association between ESG performance and ESG disclosure, the effect of ESG performance on financial performance, and the moderating role of ESG disclosure in the ESG-financial performance relationship. Our findings reveal that sustainable human capital management practices have a positive and significant impact on ESG performance, which in turn positively influences firm financial performance. We also find a positive relationship between ESG performance and ESG disclosure, and that ESG disclosure moderates the ESG-financial performance link, with the positive association being stronger for firms with higher levels of ESG disclosure. This study contributes to the literature by offering an integrated approach to examine the relationships between sustainable human capital management, ESG performance, ESG disclosure, and financial performance, providing novel insights into the drivers and outcomes of corporate sustainability in the context of human capital management. Doi: 10.28991/HEF-2024-05-02-08 Full Text: PDF

Effects of Environment, Social, and Governance (ESG) Disclosures on ESG Scores: Investigating the Role of Corporate Governance for Publicly Traded Turkish Companies

While ESG initiation and disclosure may help newly listed companies maintain a social license to operate, mitigate information asymmetry, and attract investor attention, it may impose significant costs on initial public offering (IPO) firms and magnify agency problems. Using a sample of 1102 IPOs issued in the U.S and the ESG data from MSCI between 1999 and 2016, the paper empirically tests the competing hypotheses and examines the influence of ESG disclosure and performance on the survivability of IPOs. We document that (1) voluntary ESG disclosure reduces IPO failure risks and improves long‐run performance of IPO; (2) the sooner ESG information is disclosed after the IPO, the greater the likelihood of survival and better long‐run performance; and (3) IPOs with better ESG score are less likely to fail, with the impact largely attributable to the company's social and governance performance. Our findings identify new failure risks for IPOs, supply evidence of value‐relevance of ESG, and provide practical guidance for managers.

We examine the ESG practices of companies that publicly seek a buyer. Our focus is on whether these companies increase ESG disclosure and performance before the ‘seeking-buyer’ announcement and whether these actions influence the acquisition outcome. Based on a sample of US seeking-buyer firms for the period 2000–2021, we find that seeking-buyer status is positively related to ESG disclosure but not ESG performance. We do not observe that ESG disclosure and performance are associated with the likelihood of being acquired. Our results are consistent with deals being based on targets’ financial characteristics, especially when buyers lack a shared understanding of disclosed ESG information and when this information is not supported by ESG performance.

This study examines the role of environmental, social, and governance (ESG) disclosures in insider-driven pump-and-dump stock price manipulation. Using a unique hand-collected dataset of 166 court-confirmed manipulation cases in the Taiwanese stock market from 2010 to 2024, we investigate whether ESG disclosures are strategically timed to facilitate insider trading. Firm-level ESG scores are obtained from Refinitiv, while ESG-related disclosure events are identified from regulatory announcements and news sources. We employ event-study analysis and panel logit regression models with insider trading behavior, and the timing of ESG disclosures around manipulation periods. The results show that manipulated firms exhibit significantly higher ESG scores than matched control firms. During manipulation episodes, firms with high ESG scores experience substantially larger cumulative abnormal returns than low-ESG firms. Logit regressions further indicate that the probability of ESG disclosure increases significantly prior to and during manipulation periods, particularly when insider buying intensifies, while ESG disclosures decline following insider selling. Policy implications include incorporating ESG disclosure patterns into market surveillance, strengthening ex-post verification of ESG announcements, and enhancing investor education to distinguish ESG disclosure from ESG performance.

PurposeThis paper investigates the relationship between commitment to ESG practices and firm performance using a synthetic index based on ESG disclosure and ESG performance scores.Design/methodology/approachUsing the Mazziotta-Pareto aggregation method, we develop a novel synthetic index of ESG engagement based on ESG rating and disclosure. This index is employed in a dynamic panel regression, implemented using the Arellano-Bond estimator, to explain profitability in a sample of 146 listed Canadian firms over the period spanning from 2014 to 2021.FindingsESG practices may either foster or hinder firm performance. In particular, a synergy emerges between the social and environmental dimensions of ESG practices, shedding light on the relevance of high standards in terms of environmental and social activities.Practical implicationsThe study emphasizes the significance of acknowledging the various facets of ESG engagement and the necessity of transcending the current constraints of accessible ESG data and ratings. Synthetic indices combining different types of ESG information may contribute to mitigating the problems created by strategic disclosure on the part of firms, which typically results in undesirable practices such as greenwashing and social washing.Originality/valueThis is the first study that applies the Mazziotta-Pareto method to develop a synthetic index of ESG engagement, tackling each pillar separately. Moreover, when investigating the effect of ESG engagement on profitability, we allow for cross-pillar synergies and/or trade-offs.

ESG Performance and Disclosure: A Cross-Country Analysis

This study investigates the relationship between Environmental, Social, and Governance (ESG) practices and the financial and economic performance of companies in the different capital markets of the G20 countries. ESG engagement is typically assessed by scores, and each provider employs distinct methodologies. This research uses two widely recognized scores: Bloomberg, which is focused on disclosure commitment, and Refinitiv, which is centered on actual ESG performance. Financial performance is measured by ROA, and economic performance by Tobin’s Q. The sample includes 3,580 companies across 19 G20 countries from 2005 to 2021. The findings reveal that higher ESG scores are positively correlated with improved financial and economic outcomes. Moreover, disclosure scores have a stronger effect on financial performance than performance-based scores. Among the ESG pillars, the social dimension emerges as the most influential. Comparatively, ESG disclosure has a smaller impact on financial performance in developed countries (G8) than in emerging countries (G11), while firms in developed economies exhibit superior economic performance when adopting ESG practices. These results suggest that firms, particularly in emerging markets, may benefit from greater transparency, while those in developed markets gain from substantive ESG actions, offering practical insights for investors, corporate managers, and policymakers.

In recent years, the concept of ESG has aroused the attention of all walks of life. Coupled with the tendency of policy in the field of carbon peak and carbon neutrality, ESG disclosure of enterprises has a significant impact on enterprise development. In this paper, the Wind ESG rating index is used, and five automobile companies, BYD, Geely Automobile, Dongfeng Automobile, Changan Automobile and SAIC Motor, are selected as representatives. The impact of ESG performance on enterprise value is tested by case analysis and Wind ESG disclosure rating. It is found that good corporate ESG performance can improve corporate strength and value from environmental protection, corporate social governance and other aspects. The analysis shows that better ESG performance can affect the market value by adjusting accounting profit to reduce carbon emissions and so on, thereby improving the enterprise value. Further analysis shows that the index disclosed in the evaluation of ESG indicators of enterprises can also have a reverse effect on enterprises, and thus significantly improve the long-term ESG performance of enterprises. The results of this study are helpful for investors to better understand the development prospects of enterprises. At the same time, they are helpful for enterprises to promote ESG practice and disclosure, further promote the development of enterprises, improve performance and market competitiveness, and promote enterprises to embark on the path of sustainable development.

Non-financial reporting, mainly called environmental, social, and governance (ESG) disclosures, depicts the future corporate plan apart from current corporate actions and is getting substantial attention amongst the corporate world, policymakers, and academics. ESG disclosures indicate how companies can address environmental and social challenges, setting a high standard of governance mechanism. Due to increased ESG awareness, stakeholders expect companies to engage in sustainable practices that could even exceed the mandatory disclosure requirements. Such pressure has compelled companies worldwide to improve their ESG disclosures. ESG rating providers attempt to measure companies’ ESG performance against the benchmark, focusing on the influence of ESG disclosures on financial performance. Although the composite ESG scores have a broader preference in assessing the companies’ comparative performance, those scores are unlikely to depict their real impacts on the stakeholders. Considering the inherent limitations of the composite ESG scores, the present qualitative study motivates the exploration of whether component-wise ESG scores could better address the limitations of the composite ESG scores.

This study investigates the impact of environmental, social, and governance (ESG) performance on firm financial performance in the context of Saudi Arabia, focusing specifically on publicly listed companies operating in high-pollution industries during the period from 2010 to 2023. Using the Two-Step System Generalized Method of Moments (GMM) to address endogeneity and firm-specific effects, three financial performance measures return on assets (ROA), return on equity (ROE), and Tobin’s Q are analyzed. The results indicate a significant positive relationship between ESG performance and all three financial indicators, suggesting that strong ESG performance enhances firm value by improving stakeholder trust, market valuation, and operational efficiency. The study supports stakeholder theory, signaling theory, and the resource-based view within the ESG-performance context of emerging economies. While focused on Saudi Arabia, it provides a foundation for broader regional studies as ESG disclosure standards evolve in the Gulf. The findings highlight the importance of ESG practices for corporate managers, investors, and policymakers, especially under Saudi Arabia's Vision 2030. Policymakers may consider strengthening ESG disclosure to promote transparency and sustainable development, aligning corporate performance with national sustainability goals. This research contributes to the literature on ESG and firm performance in resource-intensive, emerging markets, underscoring the value of sustainable practices in high-pollution industries.

Prior studies on the relationship between ESG information and cost of debt have found mixed results. They conclude that this relationship may be affected by some characteristics or attributes of the company. In this study, we examine whether corporate reputation mediates the relationship between ESG information and cost of debt. In other words, this study explores how ESG information influences corporate reputation, and how, in turn, corporate reputation affects the cost of debt financing. Data for corporate reputation were obtained from the Fortune “World’s Most Admired Companies” List, whereas data on ESG information were extracted from two sources: ESG performance were obtained from Sustainalytics database and ESG disclosure were obtained from Bloomberg database. Data on cost of debt and other control variables were also collected from Bloomberg database. Using structural equation models, we report a positive effect of both ESG performance and disclosure on corporate reputation. We also find that a good corporate reputation reduces the cost of debt financing and mediates the relationship between ESG performance/disclosure and cost of debt. We therefore conclude that firms that manage and disclose information on ESG issues have a better reputation, which in turn reduces their debt financing costs.

This study investigates the impact of Overall ESG and individual Disclosure scores—Environmental, Social, and Governance—on the financial performance of publicly traded companies in Post-Soviet EU states, specifically focusing on Return on Assets (ROA), Return on Equity (ROE), and Return on Investment (ROI) as financial performance indicators. Using a multiple linear regression model and a sample of 245 firms, the research examines how ESG and its components influence financial outcomes while controlling for market capitalization, company age, and R&D expenditure. The findings reveal that neither overall ESG nor individual Disclosure scores significantly affect ROA, ROE, or ROI. Notably, the Environmental Disclosure Score shows a negative but non-significant relationship with financial performance, while the Social and Governance Disclosure Scores also lack statistically significant effects. Conversely, market capitalization positively influences financial performance, and company age negatively impacts ROE and ROI. R&D expenditure does not significantly affect any financial performance measures. These results suggest that ESG disclosures in Post-Soviet EU States, may not yet be sufficiently developed to influence financial performance directly. The study underscores the importance of firm size in driving financial success in the region and emphasizes the need for further research into ESG factors in this context.

Even though there are numerous papers on the impact of ESG disclosure or performance on company performance, the topic remains disputable and controversial. The growing importance of ESG scores in investment decision-making has raised a question of whether the ESG score and its pillars influence the investment attractiveness of public companies. Using a sample of S&P 500 American and S&P 350 European companies in the period between 2010 and 2020, we examine the relationship between ESG performance and investment attractiveness, expressed by Tobin’s Q, ROE, cost of capital and probability of paying dividends. We use the difference in means, panel regression and propensity score matching analysisand conclude that higher ESG performance positively influences Tobin’s Q for both markets, while also providing evidence that ESG score transition to the above-median level may lead to a fairer valuation, higher probability of paying dividends and lower cost of capital, while return on equity is not subject to change. While previous research mainly focuses on one indicator, such as company value or cost of debt, this paper develops a set of investment attractiveness indicators and covers not only composite ESG performance, but also its environmental, social and governance pillars separately; it also emphasizes the influence on the industrial sector. Overall, our results suggest that managers pay close attention to ESG performance if it falls below median, although good ESG performance does not guarantee investment attractiveness.

The relationship between ESG disclosures and corporate tax strategies has become increasingly important due to growing stakeholder expectations for firms to transparently report their environmental, social, and governance practices. This study investigates the effect of Environmental, Social, and Governance (ESG) performance on tax avoidance among publicly listed non-financial firms in Indonesia during the 2021–2024 period. Employing Moderated Regression Analysis (MRA), the study utilizes a panel dataset comprising 180 firms listed on the Indonesia Stock Exchange. A key contribution of this research is the inclusion of the ESG committee as a moderating variable to examine how ESG performance influences corporate tax avoidance. The findings reveal that ESG performance positively and significantly affects the Effective Tax Rate (ETR), indicating an inverse relationship with tax avoidance, both for overall ESG performance and for each pillar individually. Moreover, the ESG committee strengthens this effect by serving as a moderating factor, with the social pillar exhibiting the strongest impact in reducing tax avoidance. These results underscore the substantive role of ESG committees in translating ESG practices into more responsible tax behavior.