Abstract
<p>ESG is essential to companies and only few Taiwanese firms have ESG rating record evaluated by independent third party. This study examines whether these going ahead firms associate with lower default risk. We obtain 66 Taiwanese samples that voluntarily evaluated by Morgan Stanley Capital International (MSCI) in the period of 2017 to 2021 and find they have lower industry adjusted default risk. Among them, the higher ESG rating firms have lower default risk than others with lower rating record, consisting with the finding of Li et al. (2022). Interestingly, such superiority remains no matter their ESG rating is improved or worsened in next year. It is possible that firms who voluntarily take ESG evaluation conveying they are more information transparency and have higher intention on regulatory compliance than competitors. This study suggests policymakers to consider a mandatory ESG evaluation and disclosure results freely to public for the purpose of shareholder protection.</p> <p>&nbsp;</p>
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