The Effect of Environmental, Social and Governance Consistency on Economic Results

Idoya Ferrero-Ferrero, María Ángeles Fernández-Izquierdo and María Jesús Muñoz-Torres
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Idoya Ferrero-Ferrero: Finance and Accounting Deparment, Universitat Jaume I, 12071 Castellón de la Plana, Spain
María Ángeles Fernández-Izquierdo: Finance and Accounting Deparment, Universitat Jaume I, 12071 Castellón de la Plana, Spain
María Jesús Muñoz-Torres: Finance and Accounting Deparment, Universitat Jaume I, 12071 Castellón de la Plana, Spain
Authors registered in the RePEc Author Service: Idoya Ferrero Ferrero

Sustainability, 2016, vol. 8, issue 10, 1-16

Abstract: This study aims to explore how environmental, social and governance (ESG) consistency impacts the firm performance, specifically, the relationship between ESG performance and economic performance (EP). This study posits that the company’s commitment and effectiveness towards the creation of consistent competitive advantage in environmental, social and governance dimensions constitutes an intangible value that leads improvements in corporate performance. This work uses a panel dataset for listed firms of the EU-15 countries during the period 2002 to 2011 and applies Generalized method of moments (GMM) estimator system in order to address the potential unobserved heterogeneity and dynamic endogeneity. The main results reveal that the global effect of ESG performance on EP for those firms that present interdimensional consistency is greater than the rest, except for higher levels of ESG performance.

Keywords: firm performance; economic performance; environmental; social and governance performance; consistency; synergistic effect; generalized method of moments; endogeneity problems (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:8:y:2016:i:10:p:1005-:d:79967

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