Does ESG Disclosure Influence Firm Performance?

Silvia Carnini Pulino, Mirella Ciaburri, Barbara Sveva Magnanelli and Luigi Nasta
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Silvia Carnini Pulino: Department of Business Administration, John Cabot University, 00165 Rome, Italy
Mirella Ciaburri: Department of Economia Aziendale, Università degli Studi Roma Tre, 00154 Rome, Italy
Barbara Sveva Magnanelli: Department of Business Administration, John Cabot University, 00165 Rome, Italy
Luigi Nasta: Department of Business Administration, John Cabot University, 00165 Rome, Italy

Sustainability, 2022, vol. 14, issue 13, 1-18

Abstract: This study aims to analyze the impact of the environmental, social, and governance (ESG) disclosure on the firm performance, given the stakeholders’ increasing attention to the firm’s ESG practices. Looking at the European context, the Directive 2014/95/EU and its update encouraged European large companies to provide disclosure about their socially responsible practices. Acting within the Agency and Signaling theory frameworks, this paper focuses on the Italian situation where the Legislative Decree 254/2016 implemented the European Directive and forced the largest firms (those with more than 500 employees) to disclose comprehensive information about their social and environmental activities starting from 2017. By applying a panel regression analysis, using a sample of the largest Italian listed companies, and considering a time span of 10 years (from 2011 to 2020), this study finds that there is a positive relationship between environmental, social, and governance disclosure and firm performance, measured by EBIT. Our findings will help firms’ stakeholders, decision-makers, policymakers, as well as academics, to improve their awareness of the impact of ESG disclosure on the performance of the firm, both as a comprehensive factor and individually by pillar. The findings, which support the positive relationship between ESG disclosure and firm performance, should incentivize managers to invest in CSR practices.

Keywords: ESG; sustainability; signaling theory; Directive 2014/95/EU; Italy; firm performance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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