Α review of ESG and CSR research in corporate finance
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Date
2024-09-08
Authors
Ζίου, Νικόλαος
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Abstract
This dissertation investigates the relationship between ESG/CSR practices used by companies and financial variables. The growing trend in ESG/CSR practices in corporate strategic planning and their impact on financial performance and risk management is the rationale for this dissertation. By conducting a bibliometric analysis and using various combinations of keywords in the Scopus database, the corresponding numbers of publications appearing in the results were recorded. From these results, a specific sample of publications was selected for further analysis and data visualization using Scopus Analyzer and VOS-viewer software. This sample was used to identify and record correlations between the mostly widely used financial variables and the ESG/CSR scores assigned to companies by rating agencies or other bodies that assess their ESG/CSR performance. The ESG/CSR scores were not further processed instead, the databases from which the authors of the reviewed studies obtained these scores were used. The different signs of the correlations between financial variables and ESG/CSR were illustrated in two tables. The first table included correlations between financial variables reflecting financial performance and firm value with ESG/CSR performance. The second table incorporated correlations between financial variables related to the cost of capital and the ESG/CSR performance. The contribution of the present dissertation lies not only in the study of the previous literature but also in the updating of the data up to the present day, thus providing a modern view of the correlations mentioned above. Overall, the analysis demonstrated that companies incorporating environmentally and socially responsible actions and practices in their strategic planning are able to achieve higher financial performance, reduce their costs, and mitigate risks associated to their ability to repay creditors and the possibility of experiencing bankruptcy.
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Keywords
ESG, CSR, Cost of capital, Financial performance