Subcategories of ESG controversies and firm value

Cédric Faure, Emmanuelle Nys and Amine Tarazi

Finance Research Letters, 2025, vol. 79, issue C

Abstract: To clarify the literature's conflicting findings on the impact of Environmental, Social, and Governance (ESG) controversies on firm value, this paper examines subcategory impacts within ESG pillars. We take advantage of a novel dataset to build cross-industry comparable quarterly subcategory scores. Aggregating them at different levels, our analysis of U.S. firms reveals significant impacts of controversies at both overall and sub-pillar levels, that are not systematically reduced by a higher initial ESG commitment. Conflicting subcategory effects within the same pillar explain the lack of significant pillar-level impact. This highlights the need to differentiate sub-pillar component effects to avoid premature conclusions.

Keywords: Environmental Social and Governance activities; ESG controversies; Firm value (search for similar items in EconPapers)
JEL-codes: C21 D22 G14 G20 M14 Q01 Q56 (search for similar items in EconPapers)
Date: 2025
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Working Paper: Subcategories of ESG controversies and firm value (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:79:y:2025:i:c:s1544612325005239

DOI: 10.1016/j.frl.2025.107260

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