The influence of ESG on financial performance. Evidence from a combined cluster and panel regression analysis

Cosmin-Dănuț Vezeteu (), Marius Sorin Dincă () and Raluca-Ioana Stănciulescu ()
Additional contact information
Cosmin-Dănuț Vezeteu: Transilvania University of Brașov, Romania.
Marius Sorin Dincă: Transilvania University of Brașov, Romania.
Raluca-Ioana Stănciulescu: Bucharest University of Economic Studies, Romania.

Journal for Economic Forecasting, 2024, issue 4, 82-104

Abstract: While most studies analyze the relationship between ESG and financial performance (FP) through a separate E, S and G spectrum, that approach fails to capture the risks behind a company’s exposure to material ESG issues and its management. This study proposes a novel approach, based on ESG Risk and its two dimensions: Exposure and Management. To analyze their influence on financial performance, a combined cluster and panel regression analysis is employed on data for more than 2000 firms worldwide, between 2018 - 2022. Results show that companies tend to be grouped in ESG-FP performers and laggards. However, the GMM models employed at sample and cluster leve, respectively, reveal an inconclusive relationship between the financial and non-financial variables. Future research should explore alternative methodologies, data sources and longer time horizons to better understand the evolving dynamics between ESG risk dimensions and financial performance.

Keywords: ESG; financial performance; cluster analysis; panel regression analysis; risk mitigation (search for similar items in EconPapers)
JEL-codes: C33 C38 K32 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.ipe.ro/ftp/RePEc/rjef4_2024/rjef4_2024p82-104.pdf

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:rjr:romjef:v::y:2024:i:4:p:82-104

Access Statistics for this article

Journal for Economic Forecasting is currently edited by Lucian Liviu Albu and Corina Saman

More articles in Journal for Economic Forecasting from Institute for Economic Forecasting Contact information at EDIRC.
Bibliographic data for series maintained by Corina Saman ( this e-mail address is bad, please contact ).