The Effect of Corporate Social Responsibility and the Executive Compensation on Implicit Cost of Equity: Evidence from French ESG Data

Yamina Chouaibi, Matteo Rossi and Ghazi Zouari
Additional contact information
Yamina Chouaibi: Department of Accounting and Finance, Faculty of Economics and Management of Sfax, University of Sfax, Sfax 3018, Tunisia
Matteo Rossi: Department of Law, Economics, Management and Quantitative Methods (DEMM), University of Sannio, 82100 Benevento, Italy
Ghazi Zouari: Department of Accounting and Finance, Faculty of Economics and Management of Sfax, University of Sfax, Sfax 3018, Tunisia

Sustainability, 2021, vol. 13, issue 20, 1-17

Abstract: This research aimed to evaluate the effect of corporate social responsibility (CSR) and executive incentive compensation based on the achievement of sustainability goals on the implicit cost of equity. To test the study’s hypotheses, the authors applied linear regressions on panel data using the Thomson Reuters ASSET4 and Thompson Institutional Brokers Earnings Services (I/B/E/S) database of a sample of 154 French ESG firms over the 2015–2020 period. Our results show that CSR activities lower the cost of equity capital; hence, these activities are important to shareholders’ investment and financing decisions. The results have practical implications for investors and other partners interested in the business. Thus, using the implicit cost of equity is a better estimate of shareholder requirements in the context of socially responsible businesses. The results of this work could attract the attention of socially responsible investors and, especially, corporate citizens.

Keywords: corporate social responsibility (CSR); executive compensation based on sustainability; environmental; social; governance (ESG); cost of equity (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://www.mdpi.com/2071-1050/13/20/11510/pdf (application/pdf)
https://www.mdpi.com/2071-1050/13/20/11510/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:20:p:11510-:d:659028

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().