IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v101y2025ics1059056025002941.html
   My bibliography  Save this article

CSR engagement and financial performance: The case of Italian unrated ESG small caps

Author

Listed:
  • D'Arcangelis, Anna Maria
  • Galloppo, Giuseppe
  • Guida, Roberto
  • Paimanova, Viktoriia

Abstract

A relevant issue in the corporate sustainability body of literature is how ESG-related information, embedded in a company's disclosure may influence the stock value in the absence of a third parties ESG score rating. This study examines the financial market's sensitivity to corporate social responsibility (CSR)-related information disclosed through public announcements and reports on responsible business conduct by listed Italian small and medium enterprises (SMEs), unrated in environmental, social, and governance (ESG) performance, from January 2020 to February 2023. Our findings reveal a positive and prompt market response to 289 ESG-related price-sensitive news. As a primary novel contribution, we introduce an ESG Engagement Indicator based on textual analysis techniques, revealing that financial market response is strongly and positively associated with CSR initiatives a company announces through public sustainability commitment statements. We performed several additional analyses to elucidate the dependence of market reaction on a firm's individual characteristics and the specific type of ESG news issued by the company. Robustness analyses confirm our main results. These findings might allow SMEs managers to enhance their communication tools for ESG information reporting.

Suggested Citation

  • D'Arcangelis, Anna Maria & Galloppo, Giuseppe & Guida, Roberto & Paimanova, Viktoriia, 2025. "CSR engagement and financial performance: The case of Italian unrated ESG small caps," International Review of Economics & Finance, Elsevier, vol. 101(C).
    • Handle: RePEc:eee:reveco:v:101:y:2025:i:c:s1059056025002941
    DOI: 10.1016/j.iref.2025.104131
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1059056025002941
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2025.104131?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:reveco:v:101:y:2025:i:c:s1059056025002941. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620165 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.