The Effects of Legal Origin and Corporate Governance on Financial Firms’ Sustainability Performance

David Castillo-Merino and Gonzalo Rodríguez-Pérez
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David Castillo-Merino: Department of Economics and Finance, IQS School of Management, Ramon Llull University, 08017 Barcelona, Spain
Gonzalo Rodríguez-Pérez: Department of Economics and Finance, IQS School of Management, Ramon Llull University, 08017 Barcelona, Spain

Sustainability, 2021, vol. 13, issue 15, 1-20

Abstract: This paper examines the determinants of sustainability performance in the financial industry at the firm, country and legal origin levels. Through the analysis of the ESG score in a sample of 64 countries with 982 financial firms during the period between 2002 and 2018, we find that legal origin is a significant explanatory variable. In particular, our findings indicate that companies based in civil-law countries show higher values of ESG performance than their counterparts in common-law countries, suggesting the prevalence of the stakeholder theory in explaining the willingness of financial firms to engage in sustainability practices. Moreover, and following the assumptions of the “good governance” view, we also assess the joint the effect of corporate governance and legal origin ESG scores, finding that corporate governance structures emerge as a substitution mechanism of sustainability enhancement for financial firms based in common-law countries.

Keywords: sustainability; ESG scores; legal origin; corporate governance (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 (3)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:15:p:8233-:d:599943

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