The effect of ESG and CSR attitude on financial performance in Europe: A quantitative re-examination

Abstract

Focusing on the European context, this paper re-examines the relationship between the ESG and financial performance and whether CSR attitude moderates this relationship. A panel data set with all the listed companies in STOXX Europe 600, covering the period 2012–2022 was built, with company data being sourced from the Refinitiv Eikon platform for a total of 6600 firm-year observations. Six measures of financial performance and three regression frameworks were considered for analysis. Overall, inconsistent patterns of effect are identified across ESG predictors and financial performance measures. The presence of a CSR committee was found to negatively moderate the effect of ESG score on ROA only, whereas an external auditor to the CSR report to negatively moderate it with share price. Future research should consider replicating the proposed re-examination framework in other data settings and legislative and accounting contexts to strengthen the current evidence base and therefore deepen our understanding of the mechanisms underlying the investigated relationships.