Proceedings of The 5th International Conference on Research in Management and Economics
ESG and Firm’s Risk-Taking: International Study
Sheng-Hung Chen, Xuan Thi Kim Do, Feng-Jui Hsu
This study provides international evidence for the impact of environmental, social, and governance (ESG) on firm’s risk-taking based on 7796 publicly listed firms from 74 countries over 1999-2019. We hand collect ESG, stock price, and other corporate financial data for all publicly listed firms available on the Thomson Reuter Eikon ESG database. Using the Panel data model with FGLS (Feasible Generalized Least Squares) approach, we find that firms with better aggregated ESG performance significantly mitigate the firm’s risk-taking. Our findings are robust to the results from different measures of environmental performance, social performance, and governance performance. However, firm’s characteristics are previously shown to be associated with lowering risk-taking behavior. Our empirical findings back up our assertions that the influence of ESG on corporate risk-taking is a critical mechanism via which ESG impacts firm value.
keywords: Corporate Social Responsibility, Corporate Risk-Taking, ESG, Firm Value, Stakeholders.