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The Impact of ESG Score and Controversy on Stock Performance

In: New Challenges for the Banking Industry

Author

Listed:
  • Paola Brighi

    (University of Bologna
    CEFIN—Centro Studi Banca e Finanza)

  • Antonio Carlo Francesco Della Bina

    (University of Bologna)

  • Valeria Venturelli

    (CEFIN—Centro Studi Banca e Finanza
    University of Modena and Reggio Emilia)

Abstract

Using an extensive international dataset based on Refinitiv environmental, social, corporate governance (ESG), and controversies scores, this chapter contributes investigating whether a high overall ESG score improves firm value and decreases risk and to what extent ESG controversies may negatively affect a firm’s financial performance. We find strong evidence of an improvement in value and risk associated with a better ESG score. Results are confirmed in the case of every single E, S, and G pillar. Findings also suggest that firms facing adverse ESG events experience a significant negative effect on value and risk. Our results are robust to different value and risk variables specifications and highlight that controversies affect more financial firms and emerging markets.

Suggested Citation

  • Paola Brighi & Antonio Carlo Francesco Della Bina & Valeria Venturelli, 2023. "The Impact of ESG Score and Controversy on Stock Performance," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Santiago Carbó-Valverde & Pedro J. Cuadros-Solas (ed.), New Challenges for the Banking Industry, chapter 0, pages 213-252, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-031-32931-9_9
    DOI: 10.1007/978-3-031-32931-9_9
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