ESG performance and firm value: The moderating role of disclosure

By Ali Fatemi, Martin Glaum, Stefanie Kaiser. Global Finance Journal, 2017

1,365 citations recorded by the source corpus.

This study investigates the effect of environmental, social, and governance (ESG) activities and their disclosure on firm value. We find that ESG strengths increase firm value and that weaknesses decrease it. ESG disclosure, per se, decreases valuation. But more importantly, we find that disclosure plays a crucial moderating role by mitigating the negative effect of weaknesses and attenuating the positive effect of strengths.

Subfields: Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/6859823987dfcb864651f375d9e107fb34276003

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Citations in the corpus

Do environmental, social, and governance activities improve corporate financial performance? (2018, background): “Marketbased metrics are the most frequently applied approaches (Peloza, 2009), which include share price, mutual fund returns, and market value (Fatemi et al., 2016).”
Exploring environmental, social, and governance disclosure effects on the S&P 500 financial performance (2019, methodology): “In an interesting study, Fatemi, Glaum, and Kaiser (2018) used data from KLD Research and Analytics as a proxy for a firm's ESG performance and the Bloomberg ESG score as measure of disclosure.”
Environmental, Social, Governance Activities and Firm Performance: Evidence from China (2021, result): “In addition, from the perspective of the control variables, Size and R&D were significantly positively correlated with firm performance, whereas Lev, Growth, and Mb were significantly negatively correlated with firm performance, which was basically consistent with existing research [57,58].”
ESG and Corporate Financial Performance: Empirical Evidence from China’s Listed Power Generation Companies (2018, background): “[22] studied the impact of ESG on a company’s valuation and discussed the impact of ESG disclosure.”
DOES ENVIRONMENTAL, SOCIAL AND GOVERNANCE PERFORMANCE INFLUENCE ECONOMIC PERFORMANCE? (2020, background): “Some studies concluded that there is a positive relationship between ESG and firm performance (Fatemi et al., 2018; Yoon et al., 2018; Zhao et al., 2018); while others concluded a negative relationship or no relationship at all (Atan et al.”
ESG practices and the cost of debt: Evidence from EU countries (2019, methodology): “This ﬁnding is also consistent with Fatemi et al. (2017) who ﬁnd that ﬁrms with ESG concerns beneﬁt from ESG-related disclosure; however, it is contradictory to Gao et al. (2016) who document a negative association between corporate social responsibility disclosure and the cost of debt only when…”