IDEAS home Printed from https://ideas.repec.org/a/spr/futbus/v10y2024i1d10.1186_s43093-024-00378-6.html
   My bibliography  Save this article

Exploring the impact of ESG factors on corporate risk: empirical evidence for New York Stock Exchange listed companies

Author

Listed:
  • Silvia-Andreea Peliu

    (Bucharest University of Economic Studies)

Abstract

This paper aims to investigate the impact of influential ESG factors on risk, focusing on debt risk and liquidity risk. The influence on a sample of companies listed on the New York Stock Exchange belonging to the NYSE index is analyzed over a 10-year period, 2012–2021. The quantitative framework covers a multitude of indicators regarding debt, liquidity, corporate governance, the environment, CEO characteristics, performance, and other variables, and the research methodology uses the method of least squares to highlight their impact, using regression models with fixed and random effects, both linear and nonlinear. By estimating regression models, the empirical results confirm the hypotheses found in the existing knowledge stage that debt risk and liquidity risk are significantly influenced by asset profitability, the CEO duality significantly influences debt, while CEO gender diversity has a negative influence on corporate risk, specifically debt and liquidity risk. Additionally, it is shown that the emergence of COVID-19 brings significant changes to company autonomy and their financial performance, the COVID-19 pandemic has negatively influenced corporate risk through restrictions, economic uncertainty, and the amplification of risks. These research results are crucial for practitioners by the necessity of integrating ESG criteria into the risk assessment process and decision-making. Furthermore, concerning policy decision-makers, they help promote sustainability and a responsible approach. Therefore, ESG factors can impact companies' financial performance and influence how they are perceived by investors. By understanding and correctly evaluating these ESG factors, one can identify and manage risks more efficiently, achieve better long-term returns, make appropriate decisions, and promote sustainability in the business environment.

Suggested Citation

  • Silvia-Andreea Peliu, 2024. "Exploring the impact of ESG factors on corporate risk: empirical evidence for New York Stock Exchange listed companies," Future Business Journal, Springer, vol. 10(1), pages 1-34, December.
    • Handle: RePEc:spr:futbus:v:10:y:2024:i:1:d:10.1186_s43093-024-00378-6
    DOI: 10.1186/s43093-024-00378-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s43093-024-00378-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1186/s43093-024-00378-6?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

    for a different version of it.

    References listed on IDEAS

    as
    1. Ali, Shoaib & Naveed, Muhammad & Yousaf, Imran & Khattak, Muhammad Sualeh, 2024. "From cryptos to consciousness: Dynamics of return and volatility spillover between green cryptocurrencies and G7 markets," Finance Research Letters, Elsevier, vol. 60(C).
    2. Hao, Ying & Huang, Yuxiu & Cui, Xuegang & Liu, Qiang & Zhang, Yuwen, 2021. "CEO experience and corporate financing decisions: Evidence from a natural experiment in China," China Economic Review, Elsevier, vol. 70(C).
    3. He, Feng & Ding, Cong & Yue, Wei & Liu, Guanchun, 2023. "ESG performance and corporate risk-taking: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 87(C).
    4. Safiullah, Md & Akhter, Tanzina & Saona, Paolo & Azad, Md. Abul Kalam, 2022. "Gender diversity on corporate boards, firm performance, and risk-taking: New evidence from Spain," Journal of Behavioral and Experimental Finance, Elsevier, vol. 35(C).
    5. Chowdhury, Rajib & Doukas, John A. & Mandal, Sonik, 2023. "CEO risk preferences, hedging intensity, and firm value," Journal of International Money and Finance, Elsevier, vol. 130(C).
    6. Naveed, Muhammad & Ali, Shoaib & Gubareva, Mariya & Omri, Anis, 2024. "When giants fall: Tracing the ripple effects of Silicon Valley Bank (SVB) collapse on global financial markets," Research in International Business and Finance, Elsevier, vol. 67(PA).
    7. Pu, Guifang & Xie, Yanxiang & Wang, Kai, 2023. "Board faultlines and risk-taking," Finance Research Letters, Elsevier, vol. 51(C).
    8. Ricca, Leandro Telles & Jucá, Michele Nascimento & Hadad Junior, Eli, 2021. "Tax benefit and bankruptcy cost of debt," The Quarterly Review of Economics and Finance, Elsevier, vol. 81(C), pages 82-92.
    9. Li, Yunhe & Zhang, Zhaolong, 2023. "Corporate climate risk exposure and capital structure: Evidence from Chinese listed companies," Finance Research Letters, Elsevier, vol. 51(C).
    10. Bai, Keke & Jing, Kun & Li, Tianyu, 2024. "Corporate ESG Performance and Stock Pledge Risk," Finance Research Letters, Elsevier, vol. 60(C).
    11. Ali, Shoaib & Naveed, Muhammad & Hanif, Hasan & Gubareva, Mariya, 2024. "The resilience of Shariah-compliant investments: Probing the static and dynamic connectedness between gold-backed cryptocurrencies and GCC equity markets," International Review of Financial Analysis, Elsevier, vol. 91(C).
    12. Lashkaripour, Mohammadhossein, 2023. "ESG tail risk: The Covid-19 market crash analysis," Finance Research Letters, Elsevier, vol. 53(C).
    13. Faisal Abbas & Shoaib Ali & Syed Moudud-Ul-Huq & Muhammad Naveed, 2021. "Nexus between bank capital and risk-taking behaviour: Empirical evidence from US commercial banks," Cogent Business & Management, Taylor & Francis Journals, vol. 8(1), pages 1947557-194, January.
    14. Fu, Yumei & He, Feng & Li, Jintian & Zan, Bingyan, 2024. "Commonality in liquidity and corporate default risk - Evidence from China," Research in International Business and Finance, Elsevier, vol. 69(C).
    15. DasGupta, Ranjan & Deb, Soumya G., 2022. "Role of corporate governance in moderating the risk-return paradox: Cross country evidence," Journal of Contemporary Accounting and Economics, Elsevier, vol. 18(2).
    16. Haw, In-Mu & Song, Byron Y. & Tan, Weiqiang & Wang, Wenming, 2021. "Bankruptcy, overlapping directors, and bank loan pricing," Journal of Corporate Finance, Elsevier, vol. 71(C).
    17. Al-Hadi, Ahmed & Al-Yahyaee, Khamis Hamed & Hussain, Syed Mujahid & Taylor, Grantley, 2019. "Market risk disclosures and corporate governance structure: Evidence from GCC financial firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 73(C), pages 136-150.
    18. Ahmad, Sardar & Akbar, Saeed & Halari, Anwar & Shah, Syed Zubair, 2021. "Organizational non-compliance with principles-based governance provisions and corporate risk-taking," International Review of Financial Analysis, Elsevier, vol. 78(C).
    19. Aharon, David Y. & Ali, Shoaib & Naved, Muhammad, 2023. "Too big to fail: The aftermath of Silicon Valley Bank (SVB) collapse and its impact on financial markets," Research in International Business and Finance, Elsevier, vol. 66(C).
    20. Ali, Shoaib & Naveed, Muhammad & Gubareva, Mariya & Vinh Vo, Xuan, 2024. "Reputational contagion from the Silicon Valley Bank debacle," Research in International Business and Finance, Elsevier, vol. 69(C).
    21. Chen, Huihui & Ho, Kung-Cheng & Zhang, Ming & Zhang, Qidi, 2023. "Effect of managerial ability toward corporate social responsibility on enterprise default risk," Finance Research Letters, Elsevier, vol. 54(C).
    22. Shoaib Ali & Muhammad Naveed & Aisha Saleem & Muhammad Wajahat Nasir, 2022. "Time-Frequency Co-Movement Between Covid-19 And Pakistan’S Stock Market: Empirical Evidence From Wavelet Coherence Analysis," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 17(04), pages 1-17, December.
    23. Yun, Jiyeon, 2023. "The effect of enterprise risk management on corporate risk management," Finance Research Letters, Elsevier, vol. 55(PB).
    24. Mandas, Marco & Lahmar, Oumaima & Piras, Luca & De Lisa, Riccardo, 2024. "ESG reputational risk and market valuation: Evidence from the European banking industry," Research in International Business and Finance, Elsevier, vol. 69(C).
    25. Mansi, Sattar A. & Qi, Yaxuan & Wald, John K., 2021. "Bond covenants, bankruptcy risk, and the cost of debt," Journal of Corporate Finance, Elsevier, vol. 66(C).
    26. Sun, Xiaowei & Zheng, Tianyu & Wang, Zehao & Li, Peigong, 2024. "Risk factors disclosure and corporate philanthropy," International Review of Financial Analysis, Elsevier, vol. 93(C).
    27. Ali, Shoaib & Umar, Muhammad & Naveed, Muhammad & Shan, Shan, 2024. "Assessing the impact of renewable energy tokens on BRICS stock markets: A new diversification approach," Energy Economics, Elsevier, vol. 134(C).
    28. Mohsni, Sana & Otchere, Isaac & Shahriar, Saquib, 2021. "Board gender diversity, firm performance and risk-taking in developing countries: The moderating effect of culture," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 73(C).
    29. Sattar, Mahnoor & Biswas, Pallab Kumar & Roberts, Helen, 2022. "Board gender diversity and firm risk in UK private firms," Global Finance Journal, Elsevier, vol. 54(C).
    30. Zhongtian Li & Jing Jia & Larelle Chapple, 2022. "Board gender diversity and firm risk: international evidence," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 37(4), pages 438-463, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Zhan & Gao, Xiang & Gu, Jiahao, 2025. "Can cryptocurrencies improve portfolio diversification? Evidence from the prospect risk perspective," Research in International Business and Finance, Elsevier, vol. 76(C).
    2. Alharbi, Samar S. & Naveed, Muhammad & Ali, Shoaib & Moussa, Faten, 2025. "Sailing towards sustainability: Connectedness between ESG stocks and green cryptocurrencies," International Review of Economics & Finance, Elsevier, vol. 98(C).
    3. Gülcihan Aydaner & H. Aydın Okuyan, 2024. "Decentralized finance: a comparative bibliometric analysis in the Scopus and WoS databases," Future Business Journal, Springer, vol. 10(1), pages 1-24, December.
    4. Feng, Lingbing & Qi, Jiajun & Liu, Ye & Wang, Wei, 2025. "The spillover effects of the "Binance Incident" on financial markets: A study based on machine learning approach," Finance Research Letters, Elsevier, vol. 71(C).
    5. Ali, Shoaib & Umar, Muhammad & Naveed, Muhammad & Shan, Shan, 2024. "Assessing the impact of renewable energy tokens on BRICS stock markets: A new diversification approach," Energy Economics, Elsevier, vol. 134(C).
    6. Shroff, Sumita & Agrawal, Nidhi & Paliwal, Udai Lal & Yadav, Miklesh Prasad, 2025. "How do selected asset classes react to sudden shocks? Evidence from Israel-Hamas conflict using Event Study approach," Research in International Business and Finance, Elsevier, vol. 75(C).
    7. Luo, Deqing & Yan, Jingzhou & Yan, Qianhui, 2023. "The duality of ESG: Impact of ratings and disagreement on stock crash risk in China," Finance Research Letters, Elsevier, vol. 58(PB).
    8. Maria Camila Arango-Home & Juan David González-Ruiz & Alejandro Valencia-Arias, 2023. "Relationship between Women on Board Directors and Economic Value Added: Evidence from Latin American Companies," Sustainability, MDPI, vol. 15(17), pages 1-21, September.
    9. Liu, Jinzhi & Zhu, Songhua, 2024. "Board gender diversity and innovation performance in manufacturing firms: What is the role of risk-taking?," Finance Research Letters, Elsevier, vol. 68(C).
    10. Ijaz, Muhammad Shahzad & Ali, Shoaib & Du, Anna Min & Khurram, Mahrukh, 2025. "Analyzing financial market reactions to the Palestine-Israel conflict: An event study perspective," International Review of Economics & Finance, Elsevier, vol. 98(C).
    11. Zhao, Rui & Wang, Yining & Lun, Xi & Li, Na & Wang, Rong & Zhang, Yin & Wang, Menglu, 2025. "Enterprise financialization, technological empowerment, and enterprise risk-taking," Finance Research Letters, Elsevier, vol. 74(C).
    12. Ali, Shoaib & Al-Nassar, Nassar S. & Sindhu, Muzammal Ilyas & Naveed, Muhammad, 2025. "Sustainable synergy: Static and dynamic nexus between ESG and BRICS equity markets," Research in International Business and Finance, Elsevier, vol. 74(C).
    13. Nasir, Rana Muhammad & He, Feng & Yousaf, Imran, 2025. "Relationship of green cryptocurrencies, energy tokens, centralized and decentralized exchange tokens with crypto policy uncertainty," Research in International Business and Finance, Elsevier, vol. 75(C).
    14. Chen, Po-Lin, 2024. "Bankruptcy experiences and cash holding behaviors: Case of Japan," Pacific-Basin Finance Journal, Elsevier, vol. 88(C).
    15. Jamaani, Fouad, 2025. "Can female directors affect IPO withdrawal risk?," Business Horizons, Elsevier, vol. 68(3), pages 361-383.
    16. Liu, Shimeng & Xiong, Xiong & Gao, Ya, 2025. "Market-based environmental regulations and green innovation: Evidence from the pilot carbon markets in China," Research in International Business and Finance, Elsevier, vol. 77(PA).
    17. Liu, Yang & Dong, Kangyin & Nepal, Rabindra & Afi, Hatem, 2025. "How do climate risks affect corporate ESG performance? Micro evidence from China," Research in International Business and Finance, Elsevier, vol. 76(C).
    18. Ben Ameur, Hachmi & Ftiti, Zied & Louhichi, Waël & Yousfi, Mohamed, 2024. "Do green investments improve portfolio diversification? Evidence from mean conditional value-at-risk optimization," International Review of Financial Analysis, Elsevier, vol. 94(C).
    19. Yousaf, Imran & Cui, Jinxin & Ali, Shoaib, 2024. "Dynamic spillover between green cryptocurrencies and stocks: A portfolio implication," International Review of Economics & Finance, Elsevier, vol. 96(PB).
    20. Md Lutfur Rahman & Sudipta Bose, 2025. "Firm-level Climate Vulnerability and Corporate Risk-taking: International Evidence," Working Papers DP-2024-36, Economic Research Institute for ASEAN and East Asia (ERIA).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    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:spr:futbus:v:10:y:2024:i:1:d:10.1186_s43093-024-00378-6. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.