Does ESG performance affect the financial performance of environmentally sensitive industries? A comparison between emerging and developed markets

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Naeem N., ÇANKAYA S., BİLDİK R.

Borsa Istanbul Review, cilt.22, 2022 (SSCI) identifier identifier

  • Yayın Türü: Makale / Derleme
  • Cilt numarası: 22
  • Basım Tarihi: 2022
  • Doi Numarası: 10.1016/j.bir.2022.11.014
  • Dergi Adı: Borsa Istanbul Review
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus, EconLit, Directory of Open Access Journals
  • Anahtar Kelimeler: ESG performance, Environmentally sensitive industry, Corporate social responsibility, Financial performance
  • İstanbul Ticaret Üniversitesi Adresli: Evet

Özet

This study seeks to investigate whether the environmental, social, and governance (ESG) performances of corporations from environmentally sensitive industries affect their financial performance. Moreover, the study determines how the impact of ESG performance on the corporate financial performance of environmentally sensitive corporations differs between developed and emerging countries. Our sample comprises 383 environmentally sensitive corporations, with 305 and 78 corporations from developed and emerging countries, respectively. Our findings indicate that overall ESG performance of environmentally sensitive corporations has a significantly positive relationship with the return on equity and Tobin's Q of the corporations. Moreover, our findings indicate that the impacts of the ESG performance of environmentally sensitive corporations on the financial performance are stronger in developed countries than emerging countries. This study contributes to the literature by adding a better understanding of the ESG–financial performance relationship, especially for the environmentally sensitive industries from both developed and emerging countries.