Environmental, Social and Governance (ESG) Scores and Financial Performance of Multilatinas: Moderating Effects of Geographic International Diversification and Financial Slack

By Eduardo Duque‐Grisales, J. Aguilera‐Caracuel. Journal of Business Ethics, 2019

967 citations recorded by the source corpus.

This paper examines whether a firm’s financial performance (FP) is associated with superior environmental, social and governance (ESG) scores in emerging markets of multinationals in Latin America. The study addresses the current research gap on this issue; it develops hypotheses and tests them by applying linear regressions with a data panel drawn from the Thomson Reuters Eikon™ database to analyse data on 104 multinationals from Brazil, Chile, Colombia, Mexico and Peru between 2011 and 2015. The results suggest that the relationship between the ESG score and FP is significantly statistically negative. Furthermore, in examining environmental, social and governance separately to accurately determine each variable’s relationship to multilatinas’ FP, the results reveal a negative relationship. Finally, the empirical analysis provides evidence for a moderating effect of financial slack and geographic international diversification on the relationship between ESG dimensions and firms’ FP. This study furthers understanding of the relationship between ESG dimensions and FP for the Latin American business context.

Subfields: Economics and Econometrics, Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/67abe510198e4c5561c418866a3dd5eb3a843adc

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In Economics and Econometrics

1. Lei Ruan
2. Lina Liu
3. Fen Zhang
4. Heng Liu
5. Xiaonan Qin

In Marketing

1. Lei Ruan
2. Lina Liu
3. Fen Zhang
4. Heng Liu
5. Xiaonan Qin

In Strategy and Management

1. Lei Ruan
2. Lina Liu
3. Fen Zhang
4. Heng Liu
5. Xiaonan Qin

Citations in the corpus

• The Interaction Effect between ESG and Green Innovation and Its Impact on Firm Value from the Perspective of Information Disclosure (2020, background): “Duque-Grisales (2019) found that investment in ESG activities will increase the costs for enterprises, and ESG scores are significantly negatively correlated with the financial performance of enterprises [29].”
• Environmental, Social, Governance Activities and Firm Performance: Evidence from China (2021, background): “Duque-Grisales and Aguilera-Caracuel found a negative correlation between ESG scores and financial performance in Latin American countries [43].”