Search Results (528)

Aggressive corporate tax avoidance represents a significant fiscal and governance challenge in developing economies, where public revenues are critical for sustainable development and enforcement capacity is often uneven. This study examines whether environmental, social, and governance (ESG) performance constrains corporate tax avoidance and whether this relationship is conditioned by national institutional quality. Using a multi-country panel of 2464 publicly listed non-financial firms from 14 developing economies over the period 2015–2023, the analysis employs fixed-effects estimation, dynamic System GMM, and instrumental-variable (2SLS) techniques to address unobserved heterogeneity and endogeneity concerns. The results indicate that stronger ESG performance is associated with significantly lower levels of tax avoidance; however, this effect is highly contingent on institutional quality. ESG exerts a substantive disciplining role primarily in governance-strong environments characterized by effective regulation and credible enforcement. Heterogeneity analyses further reveal that the ESG–tax avoidance relationship is driven mainly by the governance and environmental pillars, is more pronounced among large firms, varies across regions, and strengthens over time as ESG frameworks mature. In contrast, the social ESG dimension and smaller firms exhibit weaker or insignificant effects, consistent with symbolic compliance in low-enforcement settings. By integrating stakeholder, legitimacy, agency, and institutional theories, this study advances a context-sensitive understanding of ESG effectiveness and helps reconcile mixed findings in the existing literature. The findings offer policy-relevant insights for regulators and tax authorities seeking to strengthen fiscal discipline and development financing in developing economies. Full article

Background: The increasing integration of Environmental, Social, and Governance (ESG) factors into financial decision-making has prompted debate over their impact on corporate credit risk. While many studies suggest that ESG performance may enhance firms’ resilience, empirical evidence remains mixed due to data inconsistency and methodological heterogeneity and differences in time horizons over which ESG effects materialise. Methods: The study investigates the relationship between ESG performance and credit risk using a panel of European firms from 2020 to 2024, a phase highly characterised by substantial macroeconomic shocks. The Altman Z-score serves as a proxy for default risk, while ESG data are sourced from Refinitiv Eikon. Four fixed-effects panel regressions are estimated: a baseline model using aggregate ESG scores, an extended model with financial controls, and disaggregated and sector-specific models. Results: The findings indicate that ESG scores—either aggregated or by pillar—show limited statistical significance in explaining variations in the Z-score. In contrast, financial variables such as solvency, liquidity, and cash flow ratios display strong, positive, and significant effects on credit stability. Some heterogeneous sectoral effects emerge: social factors are positive in technology, while governance has a negative impact in basic materials. Conclusions: ESG initiatives may not yield immediate improvements in default risk metrics, particularly over short and crisis-dominated periods, but could enhance financial resilience over time. Combining ESG information with traditional financial ratios remains essential; the results underscore the importance of consistent and high-quality ESG disclosure to reduce measurement error and enhance comparability across firms. Full article

The current landscape of Environmental, Social, and Governance (ESG) ratings is fragmented by methodological inconsistencies, lack of standardization, and substantial divergences among rating providers. These discrepancies hinder comparability, reduce transparency, and undermine the reliability of ESG assessments, limiting their effectiveness for both investors and corporate decision-makers. To address these issues, this study introduces a standardized approach to ESG rating construction, aimed at enhancing the objectivity and interpretability of corporate sustainability evaluations. The methodology integrates the Global Reporting Initiative standards with the United Nations Sustainable Development Goals, thereby identifying a coherent set of key performance indicators across the ESG pillars. By relying solely on publicly available data and incorporating mechanisms for managing missing information, the model provides a transparent and reproducible framework for sustainability assessment. Its validity is demonstrated through an empirical application to firms in the financial and manufacturing sectors across Europe and the United States, with benchmarking against established ratings from providers. Rather than replicating existing ESG scores, the model offers a transparent and reproducible alternative built on disclosed performance data, without relying on forward-looking statements, corporate promises, or commercial data providers. By penalizing non-disclosure and enabling sector-specific sensitivity analysis, the framework supports more accountable and customizable sustainability assessments, helping align ESG evaluations with strategic and regulatory priorities. Full article

This study examines how corporate social responsibility (CSR) influences sustainable finance outcomes (SFO) in the Ethiopian Insurance industry through environmental, social, and governance (ESG) practices and institutional challenges (IC). Using covariance-based structural equation modelling (CB-SEM) with data collected from a primary survey, the results show that CSR has both a direct and an indirect positive effect on SFO through ESG. However, the adoption of ESG practices also tends to increase institutional challenges, which in turn negatively influences SFO. This interaction produces a competitive partial mediation effect. The serial mediation path CSR–ESG–IC–SFO is found to be negative, suggesting that enabling and constraining forces operate simultaneously. From a theoretical point of view, the study combines stakeholder, legitimacy, and institutional theories to explain this competitive mediation within a less-studied Sub-Saharan African (SSA) frontier market. On the practical side, the findings highlight the importance of establishing ESG disclosure standards, investing in capacity building, and strengthening governance systems to reduce institutional frictions and make CSR a stronger driver of sustainable finance. Full article

This study investigates the impact of city-level capital factor market integration on corporate ESG performance, using a sample of Chinese A-share listed companies from 2010 to 2024. We find that greater capital factor market integration significantly improves firms’ overall ESG performance. Mechanism analysis reveals that capital factor market integration operates through three channels: market competition, technological advancement, and attention reconstruction, enhancing both firms’ capabilities and incentives to engage in ESG activities. The positive effect is stronger for state-owned enterprises, firms in less polluting industries, and those in regions with high government environmental attention. Further analysis indicates that capital factor market integration suppresses corporate greenwashing behavior and reduces discrepancies across ESG rating agencies. Moreover, capital factor market integration exhibits asymmetric effects across ESG sub-dimensions, significantly improving environmental and governance performance while weakening social responsibility performance. This reflects firms’ preference, under competitive pressure, for environmental and governance domains characterized by shorter payback periods and more readily quantifiable outcomes, as well as their cautious stance toward the social responsibility domain where effects take considerably longer to materialize. This study contributes to understanding the micro-level mechanisms through which capital factor market integration influences corporate sustainable development, providing empirical evidence for China’s construction of a unified national market and the advancement of sustainable development strategies. Full article

This study investigates the “insurance-like effect” of corporate Environmental, Social, and Governance (ESG) performance amid financial restatement events among Chinese listed firms and examines the moderating role of ESG rating divergence. Employing an event study methodology on a sample of 1552 financial restatement events in China’s A-share market from 2013 to 2023, we measure market reactions using the cumulative abnormal return (CAR) over a [−1, +1] day window. Our findings reveal that strong ESG performance significantly mitigates the negative market reactions triggered by financial restatements. However, this protective effect of ESG is significantly weakened by the inconsistency in ESG assessments among rating agencies, known as ESG rating divergence, particularly when such divergence is persistent. We argue that the underlying mechanism is that rating divergence creates signal conflicts, exacerbates information asymmetry, and erodes the credibility of ESG signals. This, in turn, undermines the stakeholder trust and moral capital that underpin the insurance-like effect. This research sheds light on the complex impact of ESG rating divergence on the value-protective mechanism of ESG and contributes new empirical evidence to the literature on ESG and its insurance-like effect, especially within the context of an emerging market. Full article

The study introduces an AI-enhanced Environmental, Social, and Governance (ESG) framework that integrates explainable artificial intelligence (XAI) and bias-mitigation techniques to improve transparency and comparability of sustainability assessments across sectors. Addressing the persistent gap in standardized ESG evaluation methods, the framework combines gradient-boosting models (XGBoost) with SHAP-based explainability and a human-in-the-loop (HITL) validation layer. The approach is demonstrated using ESG indicators for 18 firms across three industries from the banking, aviation, and chemical sectors between 2021 and 2023. Results indicate an average 12.4% improvement in ESG-score consistency and a 9% reduction in inter-sector variance relative to baseline traditional ESG evaluations. Fairness metrics (Disparate-Impact Ratio = 0.81–0.86) provide preliminary evidence of improved alignment across sectors. The findings provide preliminary evidence that XAI-driven frameworks can enhance the trustworthiness and regulatory compliance of ESG analytics, particularly under the EU AI Act and Corporate Sustainability Reporting Directive (CSRD). The framework contributes to both research and practice by operationalizing explainability, fairness, and human oversight within ESG analytics, thereby supporting more reliable and comparable sustainability reporting. Full article

Enhancing corporate green innovation is a critical component of advancing sustainable transformation and addressing escalating climate-related risks. From a cognition-to-behavior perspective, this paper constructs a climate risk perception index based on annual report texts from Chinese A-share listed firms from 2003 to 2023 and examines its impact on corporate green innovation, as well as the underlying mechanisms. The study finds that stronger climate risk perception significantly promotes both the quality and quantity of corporate green innovation. Mechanism analyses show that this effect operates through alleviating financing constraints, increasing research and development (R&D) investment, and improving environmental, social, and governance (ESG) performance. Heterogeneity tests further indicate that the positive impact is more pronounced among firms located in eastern China and among state-owned firms. Regarding scale heterogeneity, climate risk perception boosts the quantity of green innovation more effectively in large firms and boosts the quality of green innovation more effectively in small firms. This study provides micro-level evidence and theoretical insights into corporate green transformation behaviors under climate uncertainty. Full article

As global sustainable development progresses and the United Nations Sustainable Development Goals (SDGs) gain increasing prominence, pharmaceutical manufacturing firms face mounting challenges in implementing environmental, social, and governance (ESG) practices; these include high environmental compliance costs, limited drug accessibility, and governance inefficiencies. Patient capital, characterized by long investment horizons and high tolerance for risk, is well aligned with the long-term nature of ESG-oriented activities in this industry. Using a sample of pharmaceutical manufacturing companies listed on the Shanghai and Shenzhen A-share markets from 2015 to 2024, this study systematically examines the impact of patient capital on corporate ESG performance and explores the underlying mechanisms. The empirical results show that patient capital significantly improves ESG performance among pharmaceutical manufacturing firms. These findings remain robust across a series of robustness checks, including alternative variable measurements, sample adjustments, propensity score matching, instrumental variable estimation, and changes in the sample period. Further analysis reveals that patient capital enhances ESG performance through two primary channels: alleviating financing constraints and increasing R&D investment intensity. By focusing on the pharmaceutical manufacturing industry, this study extends the literature on patient capital to a highly regulated and socially sensitive sector, providing empirical evidence on how long-term, value-oriented capital can support sustainable development and improve ESG performance in industries with strong public welfare attributes. Full article

This study empirically investigates the relationship between Environmental, Social, and Governance (ESG) scores and the financial performance of Mexican companies traded at Bolsa Mexicana de Valores (BMV), based on firm value and profitability. The study used a quantitative method of correlational research. Using data from the Refinitiv, the study analyzes 103 companies operating in 37 different industries listed on the BMV over five years (2019–2023), excluding financial institutions. Ordinary least squares (OLS) regressions revealed a statistically significant, positive correlation between ESG scores associated with higher return on assets (ROA) and market value measured by Tobin’s Q). Stakeholder theory serves as the theoretical foundation, as ESG initiatives may enhance long-term value for stakeholders. The study found that ESG efforts contribute positively to ROA and Tobin’s Q of public companies in Mexico. This study focuses exclusively on Mexican companies, expanding the existing literature. Corporate decision makers and investors can gain insights into ESG’s role in Mexican companies’ financial strategy and stakeholder value creation. Full article

Environmental, Social, and Governance (ESG) factors have become central to international trade, transforming how firms, industries, and governments engage in global markets. This study conducts a systematic literature review to synthesize current knowledge on the ESG–trade nexus. Using content analysis, three key thematic clusters were identified: (i) ESG in supply chains and logistics, (ii) ESG in export performance and international competitiveness, and (iii) ESG and trade within geopolitics, energy, and resource security. The synthesis reveals that ESG has evolved from a voluntary corporate initiative into a structural determinant of global competitiveness, resilience, and legitimacy. Building on these findings, the study proposes an integrative ESG–Trade framework, which conceptualizes ESG as a multidimensional governance ecosystem comprising (i) institutional and regulatory, (ii) technological and operational, and (iii) geopolitical and strategic dimensions. This framework explains how sustainability regulations, digital transformation, and global political economy dynamics co-evolve to shape trade flows and industrial upgrading. The study highlights the need for greater regulatory coherence and strategic ESG integration while offering a foundation for future interdisciplinary and empirical research on sustainable trade governance. Full article

This study investigates the impact of environmental, social, and governance (ESG) performance on corporate corruption risk management (CCRM) and examines the moderating role of the risk management committee (RMC) among non-financial firms in Gulf Cooperation Council (GCC) countries for the period spanning from 2015 to 2024. Building on agency and legitimacy theories, the study argues that ESG performance strengthens governance quality and ethical accountability, which is reflected in higher quality CCRM. Additionally, RMCs are expected to play a moderating role in enhancing oversight effectiveness, which boosts such a relationship. Using panel data derived from the Refinitiv Eikon database and employing Feasible Generalized Least Squares (FGLS) regression, the results reveal that firms with higher ESG performance exhibit significantly stronger corruption risk management practices. Moreover, the interaction between ESG performance and RMC presence positively amplifies this relationship, underscoring the committee’s role in institutionalizing ethical conduct and improving governance transparency. Robustness tests using alternative ESG and CCRM measures confirm the consistency of these findings. The study provides novel empirical evidence from the GCC context, highlighting how governance structures and sustainability practices jointly enhance corporate integrity. It offers theoretical, practical, and policy implications for promoting ethical governance and sustainable development in emerging markets. Full article

Financial institutions face increased reputational, regulatory, and ethical risks as the frequency and complexity of Environmental, Social, and Governance (ESG) controversies increase. Whistleblowing mechanisms are essential in the context of institutional resilience and the mitigation of internal governance failures. This study quantifies the exposure of 364 European financial institutions to a variety of ESG controversies to assess the effectiveness of whistleblowing during the fiscal year 2024. A whistleblowing performance index that captures the relative influence of ESG-related risk factors—such as corruption allegations, environmental violations, and executive misconduct—is constructed using a hybrid Multi-Criteria Decision-Making (MCDM) framework that is based on Entropy Weighting and the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS). The results emphasize that the perceived efficacy of whistleblower systems is substantially influenced by the frequency of media-reported controversies and the presence of robust anti-bribery policies. The study provides a data-driven, replicable paradigm for assessing internal governance capabilities in the face of ESG risk pressure. Our findings offer actionable insights for regulators, compliance officers, and ESG analysts who are interested in evaluating and enhancing ethical accountability systems within the financial sector by connecting the domains of financial risk management, corporate ethics, and sustainability governance. Full article

In the face of growing geopolitical instability, an important question remains whether ESG (Environmental, Social, and Corporate Governance) indices are sensitive to geopolitical shocks and whether they can act as protective assets. The aim of the study was to empirically compare the STOXX Global ESG Leaders index with the response of the technology sector (Nasdaq 100 and Philadelphia Semiconductor Index (SOX)) to changes in the geopolitical risk index (GPR). Monthly data from 2019 to 2025 were used, along with a procedure including Vector Autoregression (VAR) modeling, Impulse Response Function (IRF) analyses, the Johansen test, and Granger causality tests. The results indicate a lack of significant relationships between GPR and the analyzed indices in the short and long term: no cointegration was found, IRF responses were weak and quickly faded, and Granger tests did not demonstrate the predictive power of GPR for the analyzed markets. VAR forecasts additionally confirmed the stable trend, unrelated to GPR fluctuations. The results suggest that ESG indices are not directly affected by geopolitical shocks, which indicate their relative resilience. A similar response was observed for technological indices. The results may have practical implications for investors interested in sustainable investing while looking for stable assets in periods of global uncertainty. The results may be important for institutional investors in terms of portfolio stabilization functions during periods of increased geopolitical uncertainty, and for policymakers and market regulators in the context of designing frameworks supporting the stability of ESG markets. Full article

Environmental, social, and governance (ESG) initiatives have gained increasing attention in the hotel industry, yet the consumer-level psychological processes through which such activities relate to booking intentions remain incompletely understood. This study aims to examine how hotel ESG activities are associated with consumers’ booking intentions by focusing on the mediating roles of corporate image and consumer trust, as well as the moderating role of environmental awareness. Survey data were collected from consumers with recent hotel stay experiences in China and analyzed using a dual-method approach, combining partial least squares structural equation modeling (PLS-SEM) and fuzzy-set qualitative comparative analysis (fsQCA). The results show that social and governance activities are positively associated with corporate image, whereas environmental and social activities are positively associated with consumer trust. Corporate image and consumer trust are, in turn, associated with higher booking intentions, while environmental awareness strengthens only the relationship between environmental activities and corporate image. In addition, the fsQCA results reveal multiple configurational pathways through which different combinations of ESG activities and consumer psychological responses are associated with high booking intention. Overall, the findings suggest that hotel ESG initiatives relate to booking intentions through differentiated psychological mechanisms and multiple pathways. Full article