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Subcategories of ESG controversies and firm value

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  • Faure, Cédric
  • Nys, Emmanuelle
  • Tarazi, Amine

Abstract

To clarify the literature's conflicting findings on the impact of Environmental, Social, and Governance (ESG) controversies on firm value, this paper examines subcategory impacts within ESG pillars. We take advantage of a novel dataset to build cross-industry comparable quarterly subcategory scores. Aggregating them at different levels, our analysis of U.S. firms reveals significant impacts of controversies at both overall and sub-pillar levels, that are not systematically reduced by a higher initial ESG commitment. Conflicting subcategory effects within the same pillar explain the lack of significant pillar-level impact. This highlights the need to differentiate sub-pillar component effects to avoid premature conclusions.

Suggested Citation

  • Faure, Cédric & Nys, Emmanuelle & Tarazi, Amine, 2025. "Subcategories of ESG controversies and firm value," Finance Research Letters, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:finlet:v:79:y:2025:i:c:s1544612325005239
    DOI: 10.1016/j.frl.2025.107260
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    Keywords

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    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • 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

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