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Is ESG more comprehensive than governance? What dividends reveal

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  • Anolick, Nina
  • Posselt, Helena
  • Wagner, Niklas

Abstract

We examine the relationship between ESG performance and dividend payout policy across European and U.S. firms. Our findings reveal a positive relationship, primarily driven by the environmental and social dimensions of ESG, while governance plays a minor role. Notably, the environmental and social pillars remain significant even after accounting for traditional corporate governance variables. This highlights that ESG captures distinct aspects of management decision-making that governance alone does not. ESG shows no significant effect on dividends in the energy sector, where firms in the U.S. maintain higher payouts, while European companies reinvest more due to regulatory pressure. Overall, ESG proves to be an independent and relevant driver of dividend policy.

Suggested Citation

  • Anolick, Nina & Posselt, Helena & Wagner, Niklas, 2026. "Is ESG more comprehensive than governance? What dividends reveal," Finance Research Letters, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:finlet:v:93:y:2026:i:c:s1544612326000255
    DOI: 10.1016/j.frl.2026.109494
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    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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