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An Inside View of Corporate ESG Practices

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  • Briscoe-Tran, Hoa

    (Ohio State University)

Abstract

Both academics and practitioners use ESG indices to assess firms’ ESG practices, but these indices might not reflect firms’ internal practices. In this paper, I introduce an inside measure of ESG practices from 10 million employee reviews via a word-embedding model. The inside measure predicts a firm’s future misconduct, governance issues, downside risk, growth, and valuation. However, it is weakly correlated with a firm’s disclosed ESG practices and existing indices. The inside measure improves after a firm makes a public ESG commitment only when the commitment is costly. Examining cyber-attacks as a shock to a firm’s incentive to appear ESG-friendly, I show that the inside measure hardly improves after the shock.

Suggested Citation

  • Briscoe-Tran, Hoa, 2021. "An Inside View of Corporate ESG Practices," Working Paper Series 2021-21, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    • Handle: RePEc:ecl:ohidic:2021-21
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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • 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
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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