Our study aims to investigate the effect of ESG controversies on the risk of listed firms in the European and US markets. To test our expectations, we focus on a sample of companies that are part of the Standard and Poor’s 500-S&P 500 and Euro Area Stock Market-EU600 indices, for the period January 2014–July 2023. We use different risk metrics and methodological perspectives. Overall, the results are in line with our expectations, confirming an increase in financial risk triggered by ESG controversies in countries and in the period where sensitivity to ESG issues is highest, as well as the associated focus on events that result in controversies. As stated by Elamer and Boulhaga (2024, p. 3313), “the idiosyncrasies of national regulatory frameworks, stakeholder ecosystems, and corporate governance cultures are pivotal in shaping firms’ responses and adaptations to ESG controversies”.
The Impact of ESG Controversies on Financial Risk: A Multi-Country and Multi-period Analysis
Giuliana Birindelli;
2025-01-01
Abstract
Our study aims to investigate the effect of ESG controversies on the risk of listed firms in the European and US markets. To test our expectations, we focus on a sample of companies that are part of the Standard and Poor’s 500-S&P 500 and Euro Area Stock Market-EU600 indices, for the period January 2014–July 2023. We use different risk metrics and methodological perspectives. Overall, the results are in line with our expectations, confirming an increase in financial risk triggered by ESG controversies in countries and in the period where sensitivity to ESG issues is highest, as well as the associated focus on events that result in controversies. As stated by Elamer and Boulhaga (2024, p. 3313), “the idiosyncrasies of national regulatory frameworks, stakeholder ecosystems, and corporate governance cultures are pivotal in shaping firms’ responses and adaptations to ESG controversies”.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
