1 s2.0 S0301479724003761 Main
1 s2.0 S0301479724003761 Main
Research article
A B S T R A C T
Focusing on the European context, this paper re-examines the relationship between the ESG and financial performance and whether CSR attitude moderates this
relationship. A panel data set with all the listed companies in STOXX Europe 600, covering the period 2012–2022 was built, with company data being sourced from
the Refinitiv Eikon platform for a total of 6600 firm-year observations. Six measures of financial performance and three regression frameworks were considered for
analysis. Overall, inconsistent patterns of effect are identified across ESG predictors and financial performance measures. The presence of a CSR committee was found
to negatively moderate the effect of ESG score on ROA only, whereas an external auditor to the CSR report to negatively moderate it with share price. Future research
should consider replicating the proposed re-examination framework in other data settings and legislative and accounting contexts to strengthen the current evidence
base and therefore deepen our understanding of the mechanisms underlying the investigated relationships.
1. Introduction this end, robust heterogeneity analyses are performed considering both
total ESG score and its of each three pillars, as well as six indicators of
Corporate Social Responsibility (CSR) and sustainability have pro financial performance. The test the effect of choice of model selection,
foundly transformed the realms of finance and accounting, guiding the data were fitted using three regression frameworks with the respective
pursuit of sustainable finance objectives championed by both institu models being compared. The moderating role of CSR attitude, including
tional investors and individuals seeking to invest in companies demon the presence of a CSR committee as well as stakeholder engagement, the
strating robust environmental, social, and governance (ESG) presence of an external auditor to the CSR report and CSR strategy, is
performance. In the present landscape, the prominence of ESG perfor also investigated. To conduct this investigation, a panel dataset covering
mance has heightened to address the increasing demands from several all the 600 companies that are listed in the STOXX 600 index Europe
stakeholders, including shareholders, customers, regulators, employees, from 2012 to 2021 was built. Company data were sourced from the
suppliers and many more, for companies to exhibit greater responsibility Refinitiv platform.
toward the environment and society (Arif et al., 2021; Camilleri, 2015). Overall, findings from this study indicate that ESG score are posi
As a result, managers are increasingly placing emphasis on ESG in tively associated with financial performance in Europe, though with
dicators to communicate their commitment to sustainability goals, marked variation across ESG scores. This study also sheds light on the
engaging in ESG-related activities to enhance their reputation and serve effect that choice of regression framework can have on the estimated
their self-interest Broadstock et al. (2019) (see Table 5). effects and presented a novel approach to account for industry-specific
Evidence on the relevance of ESG scores in predicting financial effects by conducting multi-level analyses. Attitude towards CSR does
performance has rapidly accumulated over the last decade, with recent not appear to play a vital role in moderating the studied association,
studies investigating the moderating role that a company’s attitude to except for presence of a CSR committee and whether a company’s CSR
ward CSR can have on this relationship (Bifulco et al., 2023; Bruno et al., report is subjected to external auditing both of which negatively affect it.
2023). These studies, however, have presented conflicting and often The subsequent sections of the paper are organized as follows: a
inconclusive findings. Among other factors potently explaining such review of relevant literature and hypotheses development, followed by a
inconsistency, the legislative and regulatory context in which this as presentation of the empirical strategy adopted including analytical
sociation is studied is likely to influence both the magnitude and di methods and data. The following section presents the analytical results
rection of respective effect estimates considerably. Building on previous and the last concludes with a discussion of the study findings and some
research studies focusing on Europe, a quantitative re-examination of final remarks.
the effect that ESG score has on financial performance is conducted. To
https://doi.org/10.1016/j.jenvman.2024.120390
Received 2 January 2024; Received in revised form 1 February 2024; Accepted 10 February 2024
Available online 28 February 2024
0301-4797/© 2024 The Author. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
P. Candio Journal of Environmental Management 354 (2024) 120390
2. Literature review and hypothesis development sample of 813 European firms over the 2008–2017 period focusing on
ROA and Tobin’s Q ratio. The authors found that the impact of CSR on
Several theories have been developed which can be applied to financial performance is positive and significant only if the environ
explain the relationship between ESG and financial performance, ment, social and governance score surpasses the threshold of 56.78%.
including stakeholder theory (Donaldson and Preston, 1995), institu Koundouri et al. (2022) examined empirically whether a relationship
tional theory (Pinheiro et al., 2023), signalling theory (van Zijl et al., between good ESG performance and good financial condition of com
2017) and many more. This study was framed around the value-relance panies could be documented, by considering a sample of the top 50
and neo-institutional theories which are briefly presented in the para European companies listed in the STOXX Europe ESG Leaders 50 Index
graphs below. and found conflicting results between the different financial indicators
including ROA, ROE and profit margin. A dataset of 4800 company-year
2.1. Value-relevance theory observations from the 2014–2020 period from the European STOXX 600
index was analysed by Bifulco et al. (2023) and found a negative asso
The theory of value relevance focuses on the utility of accounting ciation between ESG score and market share price. Focusing on the food
information as perceived by equity investors. Barth et al. (2001) define it industry, Sandberg et al. (2022) investigated how ESG ratings impact
as research that explores "the connection between accounting figures financial performance using an ordinary least squares regression
and the market values". One aspect of this research focuses on examining approach. The regression models were run on data from 83 companies
whether ESG scores contribute to improved financial performance. The followed for a 4-year time period (2017–2020) and results indicated a
link between ESG and financial performance is grounded in the notion modest positive association between ESG score and ROA or ROE.
that companies disclosing more information about ESG-related issues, As highlighted by a meta-analytic (Gupta and Das, 2022) and a re
and consequently allocating more resources to CSR activities, are likely view of measurement approaches (Galant and Cadez, 2017) such in
to adopt sustainable business practices. This, in turn, could lead to consistencies between study findings may originate from the different
corporate enhancements, competitive advantages, and an enhanced choices analysts made in terms data setting, choice of regression
corporate reputation (Branco and Rodrigues, 2006; Bui et al., 2020). An framework and financial performance indicators considered. Therefore,
inquiry therefore revolves around whether higher ESG ratings are aiming to shed light on these sources of uncertainty, the present study
indicative of superior financial performance. The assumption is that re-examined the above association for the European context by
companies actively involved in addressing ESG issues, as gauged by ESG addressing the following research question.
scores, are likely to attain enhanced financial performance. This also
H1. How does ESG performance relate to financial performance?
aligns with Freeman’s stakeholder theory, positing that companies bear
In recent years, the role of a company’s attitude towards CSR ac
responsibility toward all stakeholders (Clarkson, 1995). Dissatisfaction
tivities has gained increased traction among scholars. The extent of CSR
within any of these stakeholder groups, according to this theory, has the
disclosure is affected by the prevailing rules and regulations in the
potential to adversely impact financial performance (Barman, 2018).
country and industry. Organizations can implement and communicate
their CSR strategy either proactively or reactively (Chang, 2015), based
2.2. Neo-institutional theory
on the idea that companies can be at different stages in terms of their
attitude toward meeting CSR objectives and institutional posture (Rim
Neo-institutional theory asserts that changes occurring within an
and Ferguson, 2020). In this respect, the presence of a CSR committee or
institution follow a structured or systematic pattern (Scott, 2001),
team can potentially play a significant role in signalling this attitude to
leading organizations to exhibit similar or reflective behaviours.
capital markets ((Baraibar-Diez and Odriozola, 2019)). The CSR com
DiMaggio and Powell (1991) termed this uniform behaviour among
mittee is a governance body generally composed by three or more di
organizations as institutional isomorphism, categorizing it into mimetic,
rectors, with at least one independent member, which assists and
coercive, and normative isomorphism (Scott, 2001).
manages the formulation of a CSR strategy (Shaukat et al., 2016). Pre
In accordance with neo-institutional theory, various environmental
vious studies have showed that the presence of a CSR committee can
forces impact organizations’ decisions to disclose their CSR activities
positively affect CSR disclosure (Liao et al., 2015) overall ESG perfor
(Chan and Ananthram, 2020). Organizations respond to both internal
mance (Burke et al., 2019). However, no evidence has been found for
and external pressures, engaging in mimetic isomorphism (imitating the
this or the presence of an external auditor to the CSR report to affect
behaviour of other organizations), coercive isomorphism (adapting
financial performance (Panwar et al., 2023) or moderate the relation
behaviour due to external pressures), or normative isomorphism
ship between ESG and financial performance (Bifulco et al., 2023).
(adopting specific systems or standards to gain recognition). Given this
Along the same lines, evidence for whether stakeholder engagement
theoretical framework, variations in organizational behaviour based on
activities carried out by the company seems not to be conclusive, with
regulations, geographic region, industry, economic conditions, and
studies finding positive effects (Gupta et al., 2020) and neutral or
other factors systematically influencing the relationship between ESG
negative effects (Ghassim and Bogers, 2019).
and financial performance need to be placed at the centre of empirical
Therefore, based on the present literature review, it is possible to
investigations.
come to the conclusion that no reliable evidence currently exists on
whether a company’s CSR attitude defined in terms of the presence of a
2.3. Hypothesis development
CSR committee, stakeholder engagement, external auditing of and CSR
strategy. This study therefore posits the following research question.
Extensive research has been conducted on the association between
ESG and financial performance. However, the current evidence base is H2. Does CSR attitude moderate the association between ESG and
not conclusive as to whether CSR-related activities and therefore ESG financial performance?
score pay off to organizations by superior financial performance, with
studies presenting conflicting results. For the European context, recently 3. Materials and methods
published studies have quantitatively examined this relationship. Ago
raki et al. (2023) analysed the association between firm’s ESG reputa 3.1. Data setting
tional risk and financial performance measured as ROA, ROE and
Tobin’s Q in European listed companies over the 2007–2021 period. Following the European Union directive 2014/95/EU in 2014, large
They documented evidence that firms with lower reputational risk companies (those with more than 500 employees) are mandated to
perform better than their counterpart. Hamdi et al., 2022 analysed a disclose non-financial information about their ESG activities and
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P. Candio Journal of Environmental Management 354 (2024) 120390
impacts alongside their financial reporting obligations. Consequently, equity available to common shareholders against the number of shares
the sample of companies used in this study is not influenced by sample outstanding (ratio scale variable); market to book value (mtbv), which
selection bias, a common issue in studies relying on data provided seeks to evaluate whether a company’s share is over or undervalued by
voluntarily by firms. In addition, focusing on a single, yet complex comparing the market price of all outstanding shares with the net assets
geographical area helps mitigate the risk of omitted-variable problem, of the company.
which is often a much greater concern for studies covering multiple
heterogeneous areas with different financial accounting regulations, 3.3. Empirical strategy
jurisdiction and practices, making it easier to control for all fixed
characteristics simultaneously affecting the dependent and independent Two sets of regression models were estimated in accordance with the
variables (De Jong et al., 2008). Company data on the top 600 com respective hypotheses. To address hypothesis 1, the relationship be
panies listed in the STOXX 600 index for the last decade (2012–2022) tween financial performance (FP) and ESG score was evaluated, after
were sourced from Refinitiv platform (Eikon, 2022), which has been controlling for the effect of relevant financial factors (financial controls)
widely used in previous relevant studies. The data were extracted on and company’s fixed effects (ς). Given the expected heterogeneous ef
spreadsheets and subsequently imported into STATA 16 software (Sta fects indu
taCorp, 2019) for subsequent analysis. ced by industry, company (i) effects were clustered within industry
(j), where β1 is the regression coefficient of interest, as follows:
3.2. Variables
FPijt = β0 + β1 ESGijt + В2 financial controlsijt + ςij + εijt (1)
The dependent variable was financial performance which was
measured both in terms of accounting-based and combine capital In the second set of models, the moderating role of CSR attitude (CSRatt)
market-accounting metrics (all continuous variables), namely: ROA, – measured as was tested on the association between the financial per
ROE, earnings before interest and tax margin (EBITM), earning per share formance and ESG score, using the following equation, where β3 is the
(EPS), price earnings ratio (PER) and share price (PRICE). ROA was regression parameter of interest:
measured as the current year’s net income divided by average between FPijt = β0 + β1 ESGijt + β2 CSRattijt + β3 CSRattijt ∗ ESGijt
previous and current year’s total assets; ROE as the current year’s net
+ В4 financial controlsijt + ςij + εijt
income divided by average between previous and current year’s equity;
EBITM calculated by taking the pre-tax income and adding back interest
expense on debt and subtracting interest capitalized, all divided by net 3.4. Statistical analysis
sales, that is gross sales and other operating revenue less discounts,
returns and allowance; EPS as the company’s net profit divided by the Summary statistics were used to describe the sample of companies
number of common outstanding shares; PER calculated as the (average) and their characteristics. Pearson’s pairwise correlations were computed
share price divided by the earnings rate per share; PRICE as the market between the identified variables to explore sign and magnitude of uni
price of the share at the relevant month end. variate linear associations. A forward stepwise approach for model
The main explanatory variable was ESG performance, which was specification was employed, with regression models being built
proxied by the ESG score provided within the Refinitiv platform progressively.
(continuous measure). The ESG score is derived as a weighted average of Capitalising on the panel structure of the data and given an expected
three index constituents or pillars: environmental, social, and gover industry-level heterogenous treatment effects, a multi-level, mixed-ef
nance. This score is based on ten subcategories designed to reflect a fect generalised linear model approach with Gaussian specification was
company’s ESG performance, commitment, and effectiveness, utilizing employed, robust standard errors to address the issue of hetero
publicly reported information. Within Refinitiv Eikon, the three pillars skedasticity (White, 1980). To test for the effect of choice of regression
receive scores ranging from 0 (worst) to 100 (best), and these scores are framework, the specified models were adopted also using an ordinary
weighted as follows: environmental (0.44), social (0.31), and gover least square and a linear panel regression approach. A Hausman test was
nance (0.25, Eikon, 2022). CSR attitude was the moderating variable used to select the best model, that is, either the fixed effect or the
considered for addressing hypothesis 2. This dimension was defined random effect selection to analyse the data (Blackburne III and Frank,
using four declinations: CSR strategy, which reflects a company’s 2007).
practices to communicate that it integrates the economic (financial), Specification 1 included only the key explanatory variables of in
social and environmental dimensions into its day-to-day decision-mak terest, that is ESG scores and CSR attitude variables, as appropriate. The
ing processes (csrstrat, continuous variable, from 0 to 100); stakeholder subsequent specification considered a set of financial controls. Given the
engagement, which is measured as the company’s ability to explain how primary purpose of comparing the effect of predictors across multiple
it engages with and involving its stakeholders in its decision-making regression framework, all the identified variables were kept in the final
process (csrse, binary variable, yes = 1, no = 0); whether company model specifications. Interaction terms were used to evaluate the pres
has an external auditor of its CSR or sustainability report (csrsea, binary ence of effect modification. Wald tests were used to assess between-
variable, yes = 1, no = 0); and whether it has a CSR committee or team, category differences. Statistical significance was set at a p < 0.05
that is board level or senior management committee responsible for level. All analyses were performed using STATA 16 software (StataCorp,
decision making on its CSR strategy (csrsc, binary variable, yes = 1, no 2019).
= 0).
Based on the extant literature on the determinants of financial per 4. Results
formance (Lee and Suh, 2022), a set of financial controls were identified,
namely: size, measured by the firm’s market value of equity (lnmv), total From a univariate perspective, ESG scores are consistently associated
assets (lnta), total revenues (lnrev) and market capitalisation (lnmc) at with lower financial performance as measured by ROA, ROE and EBIT
the end of the financial year (all as natural logarithms, ratio scale var margin, whereas no significant association is found with EPS, price/
iable); leverage, calculated as the ratio between total debt and total earnings ratio and share price. The only exception to this pattern is
assets at the end of the financial year (ratio scale variable); beta, which is represented by the governance pillar score for which a non-significant
a measure of volatility that indicates the degree to which the company association emerges with EBIT margin, whereas is negatively associ
share is more (>1.0) or less volatile (<1.0) than the broader market ated with company’s share price (see Table 1).
(ratio scale variable); book value per share (bvps), which is the ratio of Addressing hypothesis 1 and moving from univariate linear
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P. Candio Journal of Environmental Management 354 (2024) 120390
correlation to regression analysis, Table 2 and Table 3 show the effect company’s CSR strategy (CSRSC). Overall, CSR attitude is shown to have
that total ESG score (Model 1) and its three pillars have on financial a non-significant moderating effect on the association between ESG
indicators before (Model 2) and after adjustment for financial controls score and financial performance in most instances. However, a moderate
(Model 3), considering industry-level effects (n = 11 industries). Over negative effect is found between ROA and whether the company has a
all, total ESG score does not show to be significantly associated with any CSR committee and it engages with its stakeholders (mean 0.0637, SE
financial indicator, except for ROA where a highly significant negative 0.0251). In addition, a significant effect is estimated for the presence of
effect is estimated (mean − 0.0793, SE 0.0169). an external auditor on share price, where this aspect of CSR attitude
Breaking down the total ESG score into its pillars, significant effects appears to negatively moderate the effect of ESG score (mean − 2.7967,
are estimated, the majority of which with a positive sign and hetero SE 0.5868).
geneous patterns. The environmental score is negatively associated with
ROA (mean − 0.0327, SE 0.0138), price earnings ratio (mean − 0.6172, 5. Discussion
SE 0.3045), but positively associated with share price (0.5804, SE
0.2052), suggesting that a higher score would be associated with worse The paper is concerned with re-examining the association between
profitability on the books, but higher present value of a company’s ESG and financial performance for the European context. To this end, a
future profits from the market. When further adjustments are included, panel dataset of the top 600 companies listed in the STOXX 600 index
the above associations with share price (0.4095, SE 0.2212) and price over the last decade was analysed, considering six measures of financial
per earing ration (− 0.5548, SE 0.2730) remain significant with com performance and both total and pillar-level ESG scores to account for the
parable magnitude and consistent direction, whereas positive effect are related sources of heterogeneity. This study found marked heterogeneity
uncovered with ROA (0.0394, SE 0.0135), particularly with return on of effects across the different scores, with the environmental dimension
assets (0.1198, SE 0.0502). In the fully adjusted models, the social pillar being more often associated with financial performance than the other
score is found to be strongly and positively associated with price earn two pillars, though inconsistently across accounting-based and market
ings ratio (0.8067, SE 0.4164) but negatively with EPS (− 0.5803, SE or combined measures. This could indicate that in fact ESG performance
0.3358). The latter financial indicator is the only one that appears to be does not reliably predict financial performance, at least in this group of
significantly influenced by how the company is governed (0.3941, SE companies which are more likely than the rest of the existing companies
0.1736). in the respective markets to operate in similar fashion and posture on the
Appendix I includes the results obtained by estimating the above sustainability front. However, given the task at hand, it is also likely that
effects using an ordinary least square and a panel regression approach. other factors not captured in the model specified could explain the
Overall, relatively limited consistency is identified with the effect esti mechanisms underlying the investigated associations. Nonetheless,
mates presented above, where effect direction is maintained but both robustness checks were conducted to mitigate this risk, with three
statistical significance and magnitude are affected. This shows how different regression frameworks being tested and compared.
choice of regression model and model specification can impact effect As for the moderating role of CSR attitude, relatively limited evi
estimation and could help explain, at least to some degree, the incon dence was found indicating a significant effect except for the presence of
sistent and often conflicting results in the current evidence base a CSR committee and of an external auditor to the CSR/sustainability
regarding the influence that ESG scores have on financial performance. report which seem to negatively affect ROA and market price, respec
Building on Table 2and Table 3 , Table 4 and Table 5 report the tively. As for the former, these results build on previous research by
moderating effects estimated for CSR attitude as measured by: a com Bifulco et al. (2023) who though found no evidence for this moderating
pany’s practices to communicate that it integrates the economic role for share price. However, while analysing essentially the same
(financial), social and environmental dimensions into its day-to-day group of companies, the present study considered a longer time period
decision-making processes (CSRSTRAT); whether it engages with its and implemented an empirical strategy based on a multi-level regression
stakeholders and involving them into its decision-making processes approach which enabled the estimation of industry-specific clustering of
(CSRSE); whether the company’s CSR report is subjected to external the effects, in line with the neo-institutional theory. Such discrepancies
auditing (CSRSEA); and whether there is a board-level or senior man in results highlight the importance of re-examination and replication
agement team or committee responsible for decision making on the research, like the present study, to unravel the effects that
Table 1
Pairwise correlations.
Variables (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
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Table 2
Effect of ESG scores on financial performance indicators - accounting-based metrics
ROA ROE EBITM
Variables Model 1 Model 2 Model 3 Model 1 Model 2 Model 3 Model 1 Model 2 Model 3
methodological choices have on the evidence produced and therefore directional nature (Hamdi et al., 2022), though beyond the scope of
spark academic debate and strengthen the evidence base (Peels and this research. The generalisability of these findings needs to be evalu
Bouter, 2018). ated in line with the influence of company size, being listed in a top
In the broader literature on this topic, conflicting findings have also index and legislative and normative context can have both in terms of
emerged. Chen and Wang (2011) looked at the association between CSR sustainability reporting and heterogeneity of financial performance. In
activities and three financial performance indicators (return on assets this respect, this study purposively focused on the European context and
(ROA), return on sales and growth rate of sales) in Chinese firms be on large, listed companies, to provide comparative results on entities for
tween 2007 and 2008 and found an overall positive effect. Focusing on which reliable information is available and reliable. However, it must be
US companies and on environmental activities, Liu et al. (2020) also recognised that systematic differences exist between ESG and
employed a multi-level regression approach and also found an overall financial performance providers (Berg et al., 2022), which may induce a
positive effect on ROA. Fahad and Busru (2021) instead found evidence certain degree of bias in the estimation.
for a negative association between ESG and ROA in analysing a cohort of
listed companies in India. Han et al. (2016) used three separate ESG 6. Conclusions
scores as proxies for corporate CSR activities and assessed whether they
would predict financial performance measured as return on equity The relationship between ESG and financial performance mong lis
(ROE), price earnings ratio (PER) and market price within companies ted companies in Europe is characterised by marked heterogeneity
listed in the Korean stock exchange market. Heterogenous results were which is largely unobserved and future research should employ non-
estimated for the individual ESG scores, with no evidence for the social linear and causal inference models to address this issue. To examine
pillar to affect financial performance. the generalisability of these findings future endeavours should consider
Han et al. (2016) utilized three distinct ESG scores as proxies for CSR replicating the analytical approach presented in this study in other
activities to assess their ability to predict financial performance, settings such as small and medium-size enterprises, normative contexts
measured by Return on Equity (ROE), Price-Earnings Ratio (PER), and and using alternative sources of company data, including qualitative-
market price, within companies listed on the Korean stock exchange level dimensions of sustainability.
market. Heterogeneous results were obtained for individual ESG scores,
and there was no indication that the social pillar had an impact on CRediT authorship contribution statement
financial performance.
However, the study presented some limitations that need to be Paolo Candio: Writing – review & editing, Writing – original draft,
acknowledged. Although a series of model selection and specifications Visualization, Validation, Supervision, Software, Resources, Project
were implemented, this study does not claim causality. The models were administration, Methodology, Investigation, Funding acquisition,
developed to help explain and understand the relationship between ESG Formal analysis, Data curation, Conceptualization.
and financial performance, an association which could be of bi-
5
P. Candio
Table 3
Effect of ESG scores on financial performance indicators - market-based metrics
EPS PER PRICE
Variables Model 1 Model 2 Model 3 Model 1 Model 2 Model 3 Model 1 Model 2 Model 3
– – – – – –
– – (37.6860) – – (7.1332) – – (30.4882)
leverage – – 0.0359 – – 0.3292 – – 0.2038
– – (0.1062) – – (0.2866) – – (0.4522)
beta – – − 1.5855 – – 12.7128 – – − 6.0594
– – (1.8236) – – (19.3664) – – (10.1155)
bvps – – 0.0375 – – 0.0012 – – 0.4020***
– – (0.0275) – – (0.0008) – – (0.0161)
mtbv – – − 0.0056 – – − 0.0016 – – 0.0186
– – (0.0125) – – (0.0177) – – (0.0268)
var(id[icbic]) 0.0012** 0.0014* 0.0010** <0.0001 <0.0001 <0.0001 0.0071* 0.0073* 0.0032
(0.0006) (0.0008) (0.0004) (<0.0001) (<0.0001) (<0.0001) (0.0041) (0.0038) (0.0021)
var(_cons[icbic]) 207.0515*** 224.4539*** 139.3096*** 64.9283 26.0208 22.3189 2506.6636* 2344.0160** 791.1608**
Variables ROE ROA EBITM EPS PER PRICE ROE ROA EBITM EPS PER PRICE
total ESG score − 0.0330 − 0.0013 0.0010 − 0.5254** − 0.1467 − 0.1904 − 0.0061 0.0361* 0.0023 − 0.5001 0.6422 0.6924
(0.0995) (0.0289) (0.0016) (0.2567) (0.2270) (0.5258) (0.1184) (0.0205) (0.0022) (0.4336) (0.4962) (0.6174)
stakeh. engag. − 0.1069 − 0.0187 0.0037** 1.0543* 0.0200 0.4055 10.3428 4.9638*** 0.3053 70.3621** 14.0027 25.7090
(0.1983) (0.0309) (0.0017) (0.5459) (0.5270) (0.3065) (12.0771) (1.8901) (0.2228) (27.5077) (38.9663) (33.4385)
csrstrat | csrse #esgscore 0.0016 0.0003 − 0.0001* − 0.0059 0.0044 − 0.0054 − 0.1616 − 0.0637** − 0.0037 − 0.0445 − 0.1744 − 0.7169
(0.0024) (0.0003) (0.0001) (0.0051) (0.0080) (0.0048) (0.1804) (0.0251) (0.0030) (0.4318) (0.5404) (0.6016)
lnrev 16.0336 2.6832 − 0.2129* 3.4141 − 2.7841 − 5.4247 27.8790 4.9424 − 0.0672 − 5.8479 − 5.5612 − 17.4668*
(13.3883) (2.6308) (0.1114) (6.3816) (4.3959) (4.7729) (22.9799) (4.4629) (0.0978) (8.6890) (6.3007) (9.9464)
lnta − 30.3353 − 8.1921** 0.0592 − 7.0503** − 1.3959 − 30.0089*** − 46.2812 − 11.0515* − 0.0129 − 10.5673 7.1263 − 25.6960**
(20.9775) (4.1561) (0.0405) (2.8563) (4.0931) (9.0081) (34.5095) (6.7136) (0.0619) (7.9863) (6.3115) (12.7938)
lnmc 12.4528 5.3948*** 0.3488 37.5443 − 23.1617*** 27.0741 18.3410 5.4143* 0.0515 − 24.3117 − 35.8351*** 3.8194
(8.3952) (1.6514) (0.2475) (33.8646) (5.9585) (32.3019) (15.2372) (3.2065) (0.0478) (40.2604) (12.6930) (28.7780)
lnmv 5.3932** 0.5245 − 0.1934 − 29.0786 18.2500*** 34.3236 6.8464** 1.3924 0.0389 34.1989 19.5925* 50.8623
7
(2.2446) (0.3287) (0.1814) (34.1860) (5.4294) (31.7267) (2.9920) (0.9192) (0.0255) (39.2916) (10.8324) (34.8057)
leverage 0.1067 − 0.0392 0.0007 − 0.0327 0.3133 0.1852 0.1778 − 0.0374 0.0024 − 0.1414 0.7042 0.1617
(0.1521) (0.0239) (0.0016) (0.1035) (0.3059) (0.4446) (0.2084) (0.0268) (0.0024) (0.3275) (0.5700) (0.4248)
Beta − 1.6484 0.6296 0.0276 − 2.4539 12.4708 − 5.8866 − 1.5407 0.5350 − 0.0049 9.0779 17.5139 − 19.7316
(2.9070) (0.6942) (0.0268) (1.8830) (19.5595) (9.8973) (4.3933) (1.0855) (0.0166) (7.2406) (34.4192) (13.3866)
bvps − 0.0004* − 0.0002* − 0.0000 0.0367 0.0010 0.4021*** − 0.0094 0.0048 0.0000 1.8674*** − 0.0005 1.5180**
(0.0002) (0.0001) (0.0000) (0.0271) (0.0008) (0.0162) (0.0232) (0.0058) (0.0001) (0.4813) (0.0274) (0.7128)
mtbv 0.1442 0.0264 − 0.0001 0.0009 − 0.0002 0.0188 0.1328 0.0240 − 0.0000 0.0016 0.0006 0.0195
(0.2311) (0.0334) (0.0001) (0.0104) (0.0158) (0.0259) (0.2111) (0.0296) (0.0001) (0.0094) (0.0240) (0.0221)
var(id[icbic]) 0.0018 0.0001 0.0000 0.0012 0.0000 0.0032 0.0041* 0.0002** 0.0000 0.0052 0.0000 0.0012
(0.0011) (0.0000) (0.0000) (0.0008) (0.0000) (0.0022) (0.0022) (0.0001) (0.0000) (0.0034) (0.0000) (0.0008)
var(_cons[icbic]) 598.4275 24.0645 0.0353 173.2296*** 56.5460 833.9052** 1403.2211 48.1251 0.0647 550.4204* 199.4468 1270.9553
Robust standard errors in parentheses ***p < 0.01, **p < 0.05, *<0.1.
P. Candio
Table 5
Moderating effect of external audit and sustainability committee.
CSRSEA CSRSC
Variables ROE ROA EBITM EPS PER PRICE ROE ROA EBITM EPS PER PRICE
total ESG score − 0.0091 0.0107 − 0.0011 − 0.2288 1.1672 1.9603*** − 0.0061 0.0361* 0.0023 − 0.5001 0.6422 0.6924
(0.0833) (0.0344) (0.0029) (0.1966) (0.8114) (0.6939) (0.1184) (0.0205) (0.0022) (0.4336) (0.4962) (0.6174)
external audit − 1.0893 0.7505 0.1519 32.5233 52.8428 170.9245*** 10.3428 4.9638*** 0.3053 70.3621** 14.0027 25.7090
(6.4717) (2.6179) (0.2766) (31.9742) (48.8761) (30.0056) (12.0771) (1.8901) (0.2228) (27.5077) (38.9663) (33.4385)
csrsea | csrsc #esgscore 0.0255 − 0.0025 − 0.0011 − 0.2430 − 0.8688 − 2.7967*** − 0.1616 − 0.0637** − 0.0037 − 0.0445 − 0.1744 − 0.7169
(0.0920) (0.0377) (0.0034) (0.4143) (0.8289) (0.5868) (0.1804) (0.0251) (0.0030) (0.4318) (0.5404) (0.6016)
lnrev 3.9009 − 0.0449 − 0.2460** 3.8665 − 0.2326 − 1.9451 27.8790 4.9424 − 0.0672 − 5.8479 − 5.5612 − 17.4668*
(3.2859) (0.6630) (0.0961) (7.0211) (5.1818) (3.6977) (22.9799) (4.4629) (0.0978) (8.6890) (6.3007) (9.9464)
lnta − 11.6514*** − 4.0656*** 0.0731*** − 7.4803* − 6.4628 − 35.4763*** − 46.2812 − 11.0515* − 0.0129 − 10.5673 7.1263 − 25.6960**
(4.0815) (0.9355) (0.0196) (4.4904) (4.0648) (11.8946) (34.5095) (6.7136) (0.0619) (7.9863) (6.3115) (12.7938)
lnmc 5.3082** 3.9824*** 0.3264 62.2795 − 24.4300*** 41.0593 18.3410 5.4143* 0.0515 − 24.3117 − 35.8351*** 3.8194
(2.3291) (0.5237) (0.2406) (40.6761) (6.6487) (29.7468) (15.2372) (3.2065) (0.0478) (40.2604) (12.6930) (28.7780)
lnmv 5.0336** 0.2103 − 0.1603 − 51.4827 20.8008** 18.1021 6.8464** 1.3924 0.0389 34.1989 19.5925* 50.8623
8
(2.3246) (0.4174) (0.1743) (45.2962) (8.2353) (35.9947) (2.9920) (0.9192) (0.0255) (39.2916) (10.8324) (34.8057)
leverage 0.0575 − 0.0622*** − 0.0003 0.1735 0.7460* 0.6230 0.1778 − 0.0374 0.0024 − 0.1414 0.7042 0.1617
(0.0715) (0.0134) (0.0013) (0.2820) (0.4461) (0.6461) (0.2084) (0.0268) (0.0024) (0.3275) (0.5700) (0.4248)
beta − 2.7787 0.2108 0.0432 0.9312 24.2038 − 13.5805 − 1.5407 0.5350 − 0.0049 9.0779 17.5139 − 19.7316
(3.0699) (0.4871) (0.0329) (2.9620) (28.3535) (13.9028) (4.3933) (1.0855) (0.0166) (7.2406) (34.4192) (13.3866)
bvps − 0.0006* <0.0001 <-0.0001 0.0965 0.0025* 0.5553*** − 0.0094 0.0048 0.0000 1.8674*** − 0.0005 1.5180**
(0.0003) (0.0004) <0.0001 (0.1266) (0.0015) (0.0600) (0.0232) (0.0058) (0.0001) (0.4813) (0.0274) (0.7128)
mtbv − 0.0394** − 0.0004 (<0.0001) 0.0015 − 0.0083 0.0459** 0.1328 0.0240 − 0.0000 0.0016 0.0006 0.0195
(0.0176) (0.0007) <0.0001 (0.0084) (0.0199) (0.0232) (0.2111) (0.0296) (0.0001) (0.0094) (0.0240) (0.0221)
var(id[icbic]) 0.0008 <0.0001 (<0.0001) 0.0010 <0.0001 0.0000 0.0041* 0.0002** 0.0000 0.0052 0.0000 0.0012
(0.0010) (<0.0001) (<0.0001) (0.0014) (<0.0001) (0.0009) (0.0022) (0.0001) (0.0000) (0.0034) (0.0000) (0.0008)
var(_cons[icbic]) 205.7700 2.6398 0.0328 139.0883 117.3719 760.3046 1403.2211 48.1251 0.0647 550.4204* 199.4468 1270.9553
Robust standard errors in parentheses ***p < 0.01, **p < 0.05, *p < 0.1.
P. Candio Journal of Environmental Management 354 (2024) 120390
The authors declare that they have no known competing financial Data will be made available on request.
interests or personal relationships that could have appeared to influence
the work reported in this paper.
Appendix I
Table OLS – Financial statement variables
Variables Model 1 Model 2 Model 3 Model 1 Model 2 Model 3 Model 1 Model 2 Model 3
ESG score − 0.0800*** – – − 0.1838*** – – − 0.0027*** – –
(0.0097) – – (0.0515) – – (0.0005) – –
Environmental – − 0.0483*** 0.0489*** – − 0.0637 0.1574*** – − 0.0001 0.0008
– (0.0098) (0.0094) – (0.0525) (0.0562) – (0.0006) (0.0006)
Social – − 0.0341*** − 0.0784*** – − 0.1891*** − 0.3467*** – − 0.0021*** − 0.0002
– (0.0118) (0.0110) – (0.0633) (0.0657) – (0.0007) (0.0007)
Governance – − 0.0024 0.0275*** – 0.0461 0.1154** – − 0.0004 0.0002
– (0.0090) (0.0082) – (0.0480) (0.0489) – (0.0005) (0.0005)
lnrev – – − 0.9298*** – – − 0.7341 – – − 0.2877***
– – (0.1719) – – (1.0279) – – (0.0105)
lnta – – − 4.1408*** – – − 10.9460*** – – 0.1150***
– – (0.1472) – – (0.8751) – – (0.0090)
lnmc – – 4.0946*** – – 5.5503 – – 0.3274***
– – (0.7451) – – (4.4636) – – (0.0453)
lnmv – – 1.0539 – – 8.5529* – – − 0.1883***
– – (0.7523) – – (4.5082) – – (0.0457)
leverage – – − 0.0813*** – – − 0.0898 – – 0.0019***
– – (0.0099) – – (0.0606) – – (0.0006)
beta – – 0.4059 – – − 3.3948 – – 0.0193
– – (0.3590) – – (2.1540) – – (0.0217)
bvps – – − 0.0003 – – − 0.0010 – – − 0.0000
– – (0.0002) – – (0.0014) – – (0.0000)
mtbv – – 0.0300*** – – 0.1608*** – – 0.0000
– – (0.0023) – – (0.0142) – – (0.0001)
Constant 12.1691*** 12.5131*** 15.7826*** 29.8464*** 31.9677*** 53.1582 0.4612*** 0.4553*** − 0.7966**
(0.6525) (0.6683) (5.4140) (3.4818) (3.5728) (32.4383) (0.0371) (0.0381) (0.3290)
Observations 5123 5123 4984 5135 5135 4958 5123 5123 4945
R-squared 0.0132 0.0193 0.2576 0.0025 0.0051 0.0790 0.0049 0.0048 0.1460
Standard errors in parentheses ***p < 0.01, **p < 0.05, *p < 0.1; Analysis conducted on the top 600 companies listed in the STOXX 600 index for the last decade
(2012–2022).
Variables Model 1 Model 2 Model 3 Model 1 Model 2 Model 3 Model 1 Model 2 Model 3
ESG score − 0.0184 – – 0.1656 – − 0.1964 – –
(0.1210) – – (0.1821) – − 0.2539 – –
Environmental – 0.1954 0.2033 – − 0.6300*** − 0.5603*** – 0.4748* 0.3741**
– (0.1232) (0.1333) – (0.1852) (0.2028) – − 0.2578 − 0.1629
Social – − 0.3982*** − 0.6264*** – 0.7454*** 0.8235*** – 0.2665 − 0.6561***
– (0.1481) (0.1556) – (0.2216) (0.2369) – − 0.3109 − 0.1902
Governance – 0.2009* 0.3592*** – 0.0683 0.0716 – − 1.2562*** − 0.1617
– (0.1126) (0.1158) – (0.1680) (0.1754) – − 0.2369 − 0.1419
lnrev – – 4.2797* – – − 3.8136 – – − 4.9276*
– – (2.4391) – – (3.7775) – – − 2.9884
lnta – – − 7.5110*** – – 1.1624 – – − 26.3339***
– – (2.0714) – – (3.1632) – – − 2.5353
lnmc – – 41.2891*** – – − 20.2383 – – 23.9443*
– – (10.5397) – – (16.2611) – – − 12.9622
lnmv – – − 33.0650*** – – 15.8109 – – 32.9617**
– – (10.6402) – – (16.4533) – – − 13.0724
leverage – – 0.0603 – – 0.3321 – – − 0.1645
– – (0.1406) – – (0.2168) – – − 0.1723
beta – – − 0.9644 – – 12.0177 – – 1.1589
– – (5.1391) – – (8.1988) – – − 6.2282
bvps – – 0.0379*** – – 0.0012 – – 0.4017***
– – (0.0034) – – (0.0049) – – − 0.0041
mtbv – – − 0.0058 – – − 0.0007 – – 0.0084
– – (0.0332) – – (0.0487) – – − 0.0406
Constant 28.3391*** 29.2774*** − 273.7310*** 26.5841** 22.6499* 214.1554* 88.2814*** 104.9181*** − 87.9271
(8.1954) (8.4109) (76.6078) (12.3119) (12.6285) (118.1297) − 17.1616 − 17.5917 − 94.2001
Observations 5139 5139 4998 4766 4766 4642 5142 5142 4982
R-squared 0.0000 0.0016 0.0372 0.0002 0.0031 0.0052 0.0001 0.0059 0.6765
9
P. Candio Journal of Environmental Management 354 (2024) 120390
Standard errors in parentheses ***p < 0.01, **p < 0.05, *p < 0.1; Analysis conducted on the top 600 companies listed in the STOXX 600 index for the last decade
(2012–2022).
Table XTREG – Financial statement variables
Variables Model 1 Model 2 Model 3 Model 1 Model 2 Model 3 Model 1 Model 2 Model 3
ESG score − 0.0396*** – – − 0.2379*** – – 0.0012 – –
(0.0098) – – (0.0754) – – (0.0009) – –
Environmental – − 0.0310*** − 0.0115 – − 0.1777*** − 0.0979 – 0.0003 0.0009
– (0.0096) (0.0095) – (0.0660) (0.0703) – (0.0007) (0.0008)
Social – − 0.0044 − 0.0098 – 0.0029 − 0.0662 – − 0.0006 − 0.0004
– (0.0100) (0.0097) – (0.0716) (0.0745) – (0.0008) (0.0008)
Governance – − 0.0158** 0.0029 – − 0.0800 − 0.0433 – − 0.0003 − 0.0004
– (0.0073) (0.0071) – (0.0529) (0.0547) – (0.0006) (0.0006)
lnrev – – 0.6609** – – 2.9023 – – − 0.2802***
– – (0.2927) – – (1.7827) – – (0.0174)
lnta – – − 4.3072*** – – − 12.5162*** – – 0.1157***
– – (0.2731) – – (1.5994) – – (0.0152)
lnmc – – 3.0466*** – – 2.2492 – – 0.2568***
– – (0.6174) – – (4.7910) – – (0.0528)
lnmv – – 0.8499 – – 10.5397** – – − 0.1026*
– – (0.6039) – – (4.7379) – – (0.0525)
leverage – – − 0.1462*** – – − 0.1752** – – − 0.0002
– – (0.0117) – – (0.0866) – – (0.0009)
beta – – − 0.5727** – – − 3.4020 – – − 0.0159
– – (0.2865) – – (2.2386) – – (0.0247)
bvps – – 0.0002 – – − 0.0005 – – − 0.0000
– – (0.0004) – – (0.0026) – – (0.0000)
mtbv – – 0.0098*** – – 0.0940*** – – 0.0000
– – (0.0016) – – (0.0126) – – (0.0001)
Constant 9.5349*** 10.1693*** 15.7666*** 33.3711*** 34.1481*** 67.0332* 0.2041*** 0.3284*** − 0.4499
(0.6439) (0.7463) (5.3555) (4.9580) (4.6518) (38.2736) (0.0575) (0.0518) (0.4086)
Observations 5123 5123 4984 5135 5135 4958 5123 5123 4945
Number of id 591 591 581 590 590 580 590 590 580
Standard errors in parentheses ***p < 0.01, **p < 0.05, *p < 0.1; Analysis conducted on the top 600 companies listed in the STOXX 600 index for the last decade
(2012–2022).
Variables Model 1 Model 2 Model 3 Model 1 Model 2 Model 3 Model 1 Model 2 Model 3
10
P. Candio Journal of Environmental Management 354 (2024) 120390
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