The Value Relevance of Environmental, Social, and Governance Performance: The Brazilian Case

By María del Mar Miralles-Quirós, José Luis Miralles‐Quirós, L. Gonçalves. 2018

251 citations recorded by the source corpus.

There is extensive literature on the value relevance of social responsibility for companies that operate in developed countries. However, little is known about the influence of these practices on the price of assets listed on emerging economies, such as Brazil. In this context, the aim of this study is to analyse whether social responsibility activities carried out by companies listed on the Sao Paulo Stock Exchange during the 2010–2015 period play a significant role in enhancing firm value. Unlike previous studies, we distinguish between the three modern pillars of sustainability: environmental, social, and corporate governance (ESG). Our overall results support the value enhancing theory rather than the shareholder expense theory. However, it is important to note that the results also show that the market does not significantly value the three ESG pillars. Specifically, the market positively and significantly values the environmental practices carried out by companies not related to environmentally sensitive industries. In contrast, the market positively and significantly values the social and corporate governance practices carried out by the companies belonging to these sensitive industries. These findings are relevant for both investors and the managers of these companies, policy makers, customers, and citizens concerned about ESG issues.

Subfields: Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/bce37d943efdfc725288c1f80421d8afab49cede

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Citations in the corpus

Is Earnings Quality Associated with Corporate Social Responsibility? Evidence from the Korean Market (2019, background): “[11] highlight that the consideration of environmentally sensitive industries significantly affects the valuation effect of CSR practices.”
ESG Performance and Shareholder Value Creation in the Banking Industry: International Differences (2019, background): “It has not been possible in the past due to the fact that, until very recently, sustainable reliable data about companies listed on emerging markets has not been available [34].”
Banks and environmental, social and governance drivers: Follow the market or the authorities? (2021, background): “The noise εit is assumed identically and independently distributed, whereas ηi (the time-invariant component) represents unobserved bank-specific heterogeneity in year t. 3.1 | Dependent variable (yi) Differences emerged in terms of bank performance measures used to deepen the ESGP-CFP relationship ”
Does ESG Performance Enhance Firm Value? Evidence from Korea (2018, methodology): “[2] tested and confirmed the same hypothesis for the Brazil market by introducing an interaction variable that captures an additional valuation effect of CSR in environmentally sensitive industries.”
Environmental, Social and Governance (ESG) and Investment Decision in Bangladesh (2018, background): “Corporate governance is preferred by 64% of the respondents when making their investment decision in Australia [48], whereas governance issues are not considered by stock market investors in Brazil [32].”