Financial Stability in Companies with High ESG Scores: Evidence from North America Using the Ohlson O-Score

Anton Lisin, Andrei Kushnir, Alexey G. Koryakov, Natalia Fomenko and Tatyana Shchukina
Additional contact information
Anton Lisin: Department of Financial Markets and Banks, Financial University under the Government of the Russian Federation, 125167 Moscow, Russia
Andrei Kushnir: Institute of Law, Russian University of Transport, 127055 Moscow, Russia
Alexey G. Koryakov: Department of Modern Management Technologies, MIREA-Russian Technological University, 119454 Moscow, Russia
Natalia Fomenko: Department of Theory and Technology of Management, Plekhanov Russian University of Economics, 117997 Moscow, Russia
Tatyana Shchukina: Department of Applied Law, MIREA-Russian Technological University, 119454 Moscow, Russia

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

Abstract: The benefits and advantages of the incorporation of ESG (Environmental, Social, Governing)-related policies have been discussed extensively. However, research articles focus not only on the socioecological aspects of Corporate Social Responsibility (CSR) but also on the underlying effects on a corporation’s corporate financial performance (CFP). In this regard, the current study aims to analyze the impact of ESG parameters on corporations’ financial stability. A sample size of 691 companies in North American countries was investigated in order to test the hypothesis that ESG has an effect on the likelihood of a company going bankrupt using the Ohlson O-score. This is conducted using regression models and the Pearson correlation coefficient. Furthermore, a follow-up hypothesis on the relationship between firm size and ESG is also tested in order to evaluate a tendency of corporate growth through ESG-based sustainable development. The results of the study conclude that the governing pillar of ESG factors has the highest positive impact on corporations’ financial success. Furthermore, the analysis conducted in the study with its sample size confirms the hypothesis that larger firms tend to have higher ESG scores.

Keywords: corporate social responsibility; probability of bankruptcy; corporate financial performance; ESG score; sustainability (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://www.mdpi.com/2071-1050/14/1/479/pdf (application/pdf)
https://www.mdpi.com/2071-1050/14/1/479/ (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:14:y:2022:i:1:p:479-:d:716689

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 ().