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Competition and ESG practices in emerging markets: Evidence from a difference-in-differences model

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  • Martins, Henrique Castro

Abstract

This paper investigates how competition affects firms' environmental, social, and governance (ESG) practices in 22 emerging markets, using a sample of 6,906 firm–year observations from 2011 to 2019. Using a difference-in-differences technique and matched samples with a treated and a control group, I explore exogenous variation in the competitive environment of one country, Brazil, to assess the competition´s causal effect on ESG. The results suggest that firms adjust ESG practices negatively after a shock in competition, contrasting with previous results from developed economies.

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  • Martins, Henrique Castro, 2022. "Competition and ESG practices in emerging markets: Evidence from a difference-in-differences model," Finance Research Letters, Elsevier, vol. 46(PA).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321003731
    DOI: 10.1016/j.frl.2021.102371
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    2. Barros, Victor & Verga Matos, Pedro & Miranda Sarmento, Joaquim & Rino Vieira, Pedro, 2024. "ESG performance and firms’ business and geographical diversification: An empirical approach," Journal of Business Research, Elsevier, vol. 172(C).
    3. Cicchiello, Antonella Francesca & Cotugno, Matteo & Foroni, Cristian, 2023. "Does competition affect ESG controversies? Evidence from the banking industry," Finance Research Letters, Elsevier, vol. 55(PB).
    4. Chai Bin‐Feng & Sultan Sikandar Mirza & Tanveer Ahsan & Muhammad Azeem Qureshi, 2024. "How uncertainty can determine corporate ESG performance?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 2290-2310, May.
    5. Mu, Weiwei & Liu, Kefu & Tao, Yunqing & Ye, Yongwei, 2023. "Digital finance and corporate ESG," Finance Research Letters, Elsevier, vol. 51(C).
    6. Laharish Guntuka, 2022. "Inter-Firm ESG Rivalry: A Competitive Dynamics View," Sustainability, MDPI, vol. 14(20), pages 1-17, October.
    7. Xin Xu & Zizhen Liu, 2023. "ESG, Cultural Distance and Corporate Profitability: Evidence from Chinese Multinationals," Sustainability, MDPI, vol. 15(8), pages 1-23, April.
    8. Qian, Shuitu & Yu, Wenzhe, 2024. "Green finance and environmental, social, and governance performance," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 1185-1202.
    9. Panpan Fu & Seema Wati Narayan & Olaf Weber & Yonggang Tian & Yi-Shuai Ren, 2022. "Does Local Confucian Culture Affect Corporate Environmental, Social, and Governance Ratings? Evidence from China," Sustainability, MDPI, vol. 14(24), pages 1-18, December.
    10. Jianing Xu & Weidong Li, 2023. "High-Speed Rail and Industrial Agglomeration: Evidence from China’s Urban Agglomerations," Land, MDPI, vol. 12(8), pages 1-18, August.
    11. Jyoti Dua & Anil Kumar Sharma, 2024. "Corporate Sustainability and Capital Costs: A Panel Evidence from BRICS Countries," Indian Journal of Corporate Governance, , vol. 17(1), pages 77-101, June.

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