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ESG performance and litigation risk

Author

Listed:
  • Zhang, Hua
  • Zhang, Huaqing
  • Tian, Li
  • Yuan, Shengli
  • Tu, Yongqian

Abstract

We focus on the relationship between firms’ environmental, social, and governance (ESG) responsibility performance and litigation risk. This study finds that improving firm ESG responsibility performance is conducive to reducing firm litigation risk. At the same time, internal control plays an intermediary role in the impact of firms’ ESG responsibility performance on firm litigation risk. Improving ESG responsibility performance can increase the firms’ internal control mechanisms to reduce litigation risk.

Suggested Citation

  • Zhang, Hua & Zhang, Huaqing & Tian, Li & Yuan, Shengli & Tu, Yongqian, 2024. "ESG performance and litigation risk," Finance Research Letters, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324003416
    DOI: 10.1016/j.frl.2024.105311
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    References listed on IDEAS

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    Cited by:

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    3. Lei, Shuyan & zheng, Luman, 2025. "Green investors and stock price volatility in tourism enterprises: A perspective on information disclosure quality," International Review of Economics & Finance, Elsevier, vol. 102(C).
    4. Iftikhar, Kainat & Bagh, Tanveer & Shabbir, Muhammad Nadir, 2025. "The dichotomy of corporate litigation risk in shaping ESG disclosure: Does green innovation matter?," Research in International Business and Finance, Elsevier, vol. 75(C).
    5. Zhang, Hua & Lai, Jie & Guo, Zheng, 2025. "When greenwashing meets ESG: Exploring the role of third-party ESG ratings in corporate greenwashing behavior," Journal of Business Research, Elsevier, vol. 200(C).
    6. Zhang, Zhaoguo & Cheng, Juan & Xu, Yaqin, 2025. "Executives’ ESG cognition, ESG responsibility fulfillment, and corporate competitive advantage: Evidence from China," Finance Research Letters, Elsevier, vol. 83(C).
    7. Gao, Chengyin & Zhang, Shujun, 2025. "ESG performance and corporate financialization: A dual perspective of risk management and value creation," Finance Research Letters, Elsevier, vol. 71(C).
    8. Xu, Shun & Fan, Xingyu & Wen, Shouxun, 2024. "Can accolades make stakeholders tolerant: Award-winning and corporate litigation risk," Finance Research Letters, Elsevier, vol. 67(PB).
    9. Tang, Weiran & Tang, Maolin, 2025. "Media attention, internal control quality, and legal litigation," Finance Research Letters, Elsevier, vol. 73(C).
    10. Lin, Yuya & Li, Shoubo, 2025. "Supply chain resilience, ESG performance, and corporate growth," International Review of Economics & Finance, Elsevier, vol. 97(C).

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    More about this item

    Keywords

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    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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