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ESG as a buffer: Dividend payouts responses to oil shocks

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  • Bhattacherjee, Purba
  • Mishra, Sibanjan

Abstract

The study examines the role of ESG in gauging the impact of oil shocks on corporate dividends, employing a global dataset of 91 countries. The sample comprises 9,129 firms with 67,623 firm-year observations from 2015 to 2023. The study uses Ready's (2018) oil shock decomposition methodology to estimate oil demand, supply, and risk shocks. Incorporating signaling theory, the results confirm that firms increase (decrease) dividends in response to oil-demand and -risk (-supply) shocks. Exploring ESG’s moderating role, we find that firms augment dividend payouts amidst oil shocks. Our findings are robust to alternative measures and endogeneity concerns, suggesting that strong ESG firms counter oil shock challenges by increasing dividends to signal financial stability to investors.

Suggested Citation

  • Bhattacherjee, Purba & Mishra, Sibanjan, 2025. "ESG as a buffer: Dividend payouts responses to oil shocks," Finance Research Letters, Elsevier, vol. 85(PC).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pc:s1544612325013121
    DOI: 10.1016/j.frl.2025.108054
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    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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