The impact of economic uncertainty on corporate ESG performance: Global evidence

Kan-Xiang Chen, Yaman Omer Erzurumlu, Giray Gözgör, Chi Keung Lau and Melis Turkkan

Research in International Business and Finance, 2024, vol. 72, issue PB

Abstract: This paper examines the impact of economic uncertainty on firms' overall environmental and social governance (ESG) performance in 3448 companies in 40 economies from 2006 to 2022. It is found that the overall ESG performance of corporations improves with increasing economic uncertainty for both, but more so in developed countries than developing countries. Higher competition further strengthens this relationship indirectly in developed countries but directly weakens it in developing countries. The results are also robust to run different model specifications, samples, and time selections. The findings are consistent with the Stakeholder Theory in developing country firms and a larger group of developed country firms. The results also highlight the substantial influence of economic uncertainty on corporate ESG policies, shedding light on the uncertainty-mitigating aspects of corporate ESG performance.

Keywords: Corporate governance; Corporate social responsibility; Environmental and social governance; ESG; Economic uncertainty (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:72:y:2024:i:pb:s027553192400326x

DOI: 10.1016/j.ribaf.2024.102533

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