 Equity costs and risks in emerging markets: Are ESG and Sharia principles complementary?M. Kabir Hassan, Laura Chiaramonte, Alberto Dreassi, Andrea Paltrinieri and Stefano Piserà Pacific-Basin Finance Journal, 2023, vol. 77, issue C Abstract: By proposing a novel continuous and time-varying measure of Sharia compliance, we investigate whether it enhances the effects of corporate social responsibility, proxied by Environmental-Social-Governance scores, on firms' equity costs and market risks in emerging countries. We construct a large dataset of non-financial listed firms incorporated in eighteen emerging markets, both Sharia-compliant and conventional (4612 firm-year observations from 2002 to 2018), finding a consistent, statistically significant, and negative association between the interaction of ESG scores and the Sharia sensitivity with the cost of equity. Moreover, we reveal that this negative relationship is mediated by firms' market risk (risk channel). Keywords: Environmental Social Governance (ESG) scores; Sharia-compliance; Islamic corporate finance; Market risks; Cost of equity; Emerging markets (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:77:y:2023:i:c:s0927538x22001998 DOI: 10.1016/j.pacfin.2022.101904 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
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