Despite the detrimental consequences of corporate social irresponsibility (CSiR), the role of monitoring and incentive-based corporate governance (CG) mechanisms in mitigating stakeholder mismanagement has been largely neglected in the literature. At the same time, there has been growing interest in holding executives accountable for environmental, social, and governance (ESG) performance by linking their compensation to related targets. However, prior research provides scant and inconclusive evidence on the effectiveness of ESG pay in curbing CSiR. This study addresses these shortcomings and contributes (...) to the emerging CSiR/CG literature by harnessing an institution-based view on executive compensation. Specifically, it recognizes national culture as the “missing determinant” in comparative CG studies and investigates the culturally-driven boundary conditions for the relationship between ESG pay and CSiR. The hypotheses were tested on a data set of 4066 firms from 56 countries during 2010–2020. The analysis supports a negative, though modest, effect of ESG pay on CSiR. Furthermore, the study shows that this relationship varies in statistical and economic significance across cultural contexts. Particularly, incentives prove effective for firms headquartered in nations characterized by low power distance, individualism, low uncertainty avoidance, and masculinity. Conversely, in other settings, compensation linked to ESG may either lack motivational impact or even yield counterproductive outcomes. These findings have implications for both the CSiR and CG literature, as well as for practice. (shrink)

From a simple idea to unite asset owners in their quest for responsible investment at its launch in April 2006, the United Nations supported Principles for Responsible Investment have grown in just one decade into an initiative with more than 1500 fee-paying signatories. Jointly, the PRI’s signatories hold assets worth more than $80 trillion, making it one of the more prevalent not-for-profit organizations worldwide. Furthermore, the PRI’s ambitious mission to transform the financial system at large into a more sustainable one (...) makes it a worthwhile subject of inquiry from an institutional perspective. We undertake an empirical investigation of the adoption of the PRI by asset owners during five crucial years of the association’s emergence: 2007–2011. Following a tripartite view of institutional theory proposed by Scott, we explore if regulative, normative, and cultural–cognitive factors influence an asset owner’s decision to subscribe to the PRI. Applying both parametric and non-parametric survival analysis, we find that asset owners are indeed significantly affected by normative, cultural–cognitive, and regulative aspects. In particular, public service employee and labor union pension funds from social backgrounds more culturally aligned with values represented by the RI movement with historically more voluntary legislation on environmental, social, and governance issues are most likely to sign the PRI. In contrast, institutional environments with a higher number of pre-existing mandatory ESG regulation decrease the likelihood of signing the PRI. Our results indicate that normative and cultural–cognitive factors were crucial contributors to the PRI’s growth. With respect to the regulative environments, our results imply that some asset owners may use the PRI as a collective industry initiative to substitute for mandatory legislation. Conversely, a high level of historical mandatory legislation may constrain organizational resources that could otherwise be dedicated to voluntary initiatives such as PRI. Our findings are robust to relevant controls and econometric concerns. (shrink)

Our study explores how climate risk affects the tax behavior of governments and local firms, subsequently affecting corporate pollution emissions. Using data on Chinese non-state-owned industrial enterprises from 1998 to 2014, we empirically investigate the impact of natural disasters on corporate tax avoidance. The results indicate that companies in earthquake-damaged areas are less likely to avoid taxes than those in unaffected areas. Furthermore, companies that pay more taxes after a disaster can secure favorable government environmental policies, as indicated by a (...) rise in pollution emissions. Moreover, this effect is more pronounced for less polluting firms and firms with higher financial constraints. Our study contributes to the literature on taxation and ESG from the perspective of favor-exchange in government–firm relationships. (shrink)

Résumé Par le biais de la lutte contre le terrorisme, la notion de guerre s’introduit dans le droit pénal. L’insertion de l’hostilité dans l’ordre juridique intérieur s’est d’abord effectuée par des actes administratifs relatifs aux étrangers et justifiés au nom de l’état d’urgence. Le Military Commissions Act, quant à lui, inscrit cette notion de guerre dans la loi et dans la permanence. En même temps, il en modifie le champ d’application et le contenu. Il permet au président des États-Unis de (...) désigner comme ennemis ses propres ressortissants et ses opposants politiques. (shrink)

The Patriot Act, established after the attacks of September 11, 2001, is known above all for the provisions that authorize the imprisonment, for an indeterminate period of time and without trial or even indictment, of foreigners simply suspected of terrorism. However, the law also authorizes widespread surveillance of the population. Some of the measures are permanent, while others were adopted for a period of four years. The latter, contained in sixteen articles, expired at the end of 2005.1The Patriot Act does (...) not actually contain all the statutes that are the most inimical to the freedoms and privacy of American…. (shrink)

Certains auteurs ont avancé que le premier confinement de 2020 avait profondément remis en cause nos manières d’appréhender le temps. Cette affirmation est ici discutée à partir de l’étude empirique des variations d’une dimension des rapports au temps – le sentiment de manquer de temps – avant la crise sanitaire, pendant le premier confinement, et pendant le second confinement. L’analyse statistique de données de quatre enquêtes en population générale met en évidence une atténuation d’ensemble du sentiment de manquer de temps (...) pendant le premier confinement, puis un retour partiel à la normale pendant le second confinement. La complainte du manque de temps n’a donc connu qu’une éclipse de deux mois avant de reprendre une place plus centrale dans le quotidien des Français. La rémanence des rapports au temps se manifeste également dans la remarquable stabilité de la polarisation sociale du sentiment de manque de temps, qui concerne, aussi bien en confinement qu’en temps « normal », davantage les classes supérieures, les âges médians et les femmes. Ces résultats prennent sens dans une approche sociologique des rapports au temps, saisis comme une des composantes premières du rapport au monde des individus, ancrée dans des rapports sociaux, notamment de classe et de genre. (shrink)

" Que reste-t-il de l'Etat? ". " Pas grand-chose " serait-on tenté de dire, tant on ne cesse de répéter que l'Etat est " en crise " et qu'il est entré dans un " processus de désintégration ". Certes, il existe d'évidents mouvements d'émiettement des compétences autrefois concentrées au niveau de l'Etat central. Elles sont redistribuées au profit, d'un côté, d'organisations mondiales ou européennes, supra- et inter-étatiques, de l'autre, d'entités publiques subétatiques comme, en Belgique, les Communautés et Les Régions. Certes, (...) on assiste aussi à des mouvements tangibles de retrait de l'Etat dans la gestion collective de pans importants d'activités sociales, que ce soit au profit du " marché ", de la " science " ou de la " société civile ". Mais mesure-t-on bien l'ampleur et la nature de ces processus et est-on sûr qu'ils ne sont pas compensés par d'autres qui iraient dans le sens d'un redéploiement de l'Etat? C'est à l'analyse de ces différents mouvements de repli, de redéploiement et de continuation de l'action de l'Etat dans la société actuelle qu'est consacré le présent ouvrage. Au départ de la question : " Où en est l'Etat aujourd'hui? ", cet ouvrage collectif, issu d'un congrès de politologues qui s'est tenu à l'Université Libre de Bruxelles en 2002, traite de l'avenir du mode institutionnel par lequel les êtres humains ont entendu assurer, pendant des siècles en Occident, la production de cadres communs à leur existence individuelle et collective. (shrink)

The war against terrorism enables the implementation of techniques of exception at all stages of judicial proceedings in criminal cases, front the initiation of a lawsuit to the verdict. It thus puts into question the constitutional mechanisms intended for the protection of privacy. The type of incrimination specific w the accusation of terrorism has created a specifically political crime, i.e., the intention to exert art inappropriate form of pressure on a government or an international organization. It serves as the means (...) for a preventive attack on any process of class recomposition. We thus are witnessing a suspension of the law, which is paradoxically inscribed within the law and belongs to a new legal or juridical order. This amounts to the end of the twofold dimension of the Western legal system as we have known it, namely, the separation between rule of law within and pure violence on the external level. The present imperial organization knowns no externality pure violence has been reinserted at its heart and now belongs to the rule of law. Hence the State of exception as the form of government of the Empire appears above all to be a transitional phase, a tool in the process of installing a more stable form: dictatorship. The end of the formal separation of powers as well as the legal prerogatives appropriated by the executive branch show that this process is well underway. (shrink)

In that they generalise overriding procedures, measures against terrorism actually put fundamental liberties on hold. Emergency measures are given legal status. Such shift leads to a new kind of regime in which the executive power takes on the attributes of legal power, dictatorship. This turns out to be the most appropriate form of government in an imperial structure, with the US executive setting up emergency measures and inscribing them into the Law.

We investigate how conventional asset managers account for environmental, social, and governance factors in their investment process. We do so on the basis of an international survey among fund managers. We find that many conventional managers integrate responsible investing in their investment process. Furthermore, we find that ESG information in particular is being used for red flagging and to manage risk. We find that many conventional fund managers have already adopted features of responsible investing in the investment process. Furthermore, we (...) argue and show that ESG investing is highly similar to fundamental investing. We also reveal that there is a substantial difference in the ways in which U.S. and European asset managers view ESG. (shrink)

Addressing ESG issues has become a point of interest for investors, shareholders, and governments as a risk management concern, while for firms it has become an emerging part of competitive strategy. In this study, a database from an independent ratings agency is used to examine, longitudinally, how Australian Securities Exchange (ASX) 300 firms are responding to ESG issues. Following institutional theory predictions, ASX300 firms are improving ESG performance over the 2002–2009 timeframe. Furthermore, over this timeframe, performance on the governance dimension (...) improved at a greater rate than environmental or social performance, as predicted. Lastly, high impact industries are predicted to demonstrate overall improved ESG performance relative to medium or low impact industries over the timeframe, but this hypothesis was not confirmed. Results are discussed along with implications and future research directions. (shrink)

This paper provides an examination of some problems caused by the concentration of influence in the capital markets of developed countries. In particular, I argue that large asset managers exercise quasi-political power that is not democratically legitimate. In section two, I will examine the economic driver behind the size and power of the big asset managers: the passive investing revolution. I will discuss several respects in which this revolution has fundamentally changed capital markets, most notably by making a large share (...) of investors universal owners. In the third section, I argue for my central analytical conjecture: asset managers exercise quasi-political power. They use their influence to shape the rules of the game in public capital markets in order to implement social and environmental policies that have traditionally been the exclusive purview of states. “Asset manager capitalism” is a recent term coined to refer to the contemporary system of corporate governance that succeeded the Berle and Means corporation with its dispersed ownership; the argument of this section is that asset manager capitalism is also a new political-economic regime. In the fourth section I defend my central normative claim: asset manager capitalism is an untenable and illegitimate political-economic arrangement, for at least two reasons. First, the power of asset managers is not checked by any institutional constraints, and is not rendered legitimate by any democratic process. More fundamental than this procedural critique is an argument that the interests of asset managers could not be aligned with the public interest, given the fact that the distribution of capital is highly unequal. I conclude by discussing several proposals to reform asset manager capitalism. (shrink)

We draw from resource dependence and institutional theories to explore how board characteristics associated with directors’ capacities to provide resources and legitimacy (i.e., board size, the number of non-executive, interlocking, and female directors) along with regulative, normative, and cultural-cognitive institutional conditions combine to shape firm environmental, social, and governance (ESG) performance. Using a process of configurational theorizing with fuzzy set qualitative comparative analysis and data from firms in 32 countries, we identify multiple equifinal configurations that are associated with high and (...) low ESG performance. We find that high and low ESG performance have different drivers due to complementarities among the presence and absence of board characteristics. Our results also show that the effectiveness (or not) of the bundles of boards’ characteristics for ESG performance varies across institutional contexts. By leveraging these findings to construct a typology of board archetypes that lead to high and low ESG performance, we offer novel theoretical and empirical insights to scholars as well as implications for practice. (shrink)

The aim of this paper is to investigate the relationship between environmental, social, and governance controversies and firm market value. We use a unique dataset of more than 4000 firms from 58 countries during 2002–2011. Primary analysis surprisingly shows that ESG controversies are associated with greater firm value. However, when interacted with the corporate social performance score, ESG controversies are found to have no direct effect on firm value while the interaction appears to be highly and significantly positive. Building on (...) this evidence, we attempt to explore the channels through which CSP may enhance market value. Conducting sample split analysis indicates that higher CSP score has an impact on market value only for high-attention firms, those firms which are larger, perform better, located in countries with greater press freedom, more searched on the Internet, more followed by analysts, and have an improved corporate social reputation. Thus, our findings provide new insights on the role of firm visibility through which firms can profit from their CSP. (shrink)

An updated excerpt from the larger paper AI Human Impact. Excerpt explains why ESG investing requires Updating for the AI economy.

Heterogeneous institutional investors' shareholding preferences have been driven to change by the deepening of ESG investment philosophy. Therefore, we examine the impact of corporate ESG performance on institutional investors' shareholding preferences and its mechanism of action. We conduct mixed OLS and mediation effect tests using data on ESG responsibility scores and institutional investors' shareholding ratios of A-share listed companies in China from 2010 to 2020 as samples. We find that corporate ESG performance can significantly and robustly increase institutional investors' shareholdings; (...) the mediation effect analysis shows that overall corporate ESG performance contributes to increases in corporate book and market values, thus encouraging institutional investors to increase their shareholdings. The heterogeneity analysis shows that independent institutional investors attach more importance to corporate ESG responsibility performance, and long-term institutional investors attach more importance to corporate environmental performance; moreover, institutional investors have more significant ESG shareholding preferences for Chinese SOEs. Our study can strengthen the encouragement of institutional investors to integrate ESG investment concepts from multiple perspectives, such as research and analysis, portfolio management, risk control, and due diligence management, to design and develop targeted ESG investment tools, give full play to the role of shareholders and guide the sound development of listed companies from the perspective of investment strategy objectives. (shrink)

Although legitimacy theory provides strong arguments that environmental, social and governance disclosure and performance can help mitigate firm-specific risks, this relationship has been repeatedly challenged by conceptual arguments, such as ‘transparency fallacy’ or ‘impression management’, and mixed empirical evidence. Therefore, we investigate this relationship in the revelatory case of initial public offerings, which represent the first sale of common stock to the wider public. IPOs are characterised by strong information asymmetry between firm insiders and society, while at the same time (...) suffering from uncertainty in firm legitimacy, culminating in amplified financial risks for both issuers and investors in aftermarket trading. Using data from the United States, we demonstrate that voluntary ESG disclosure reduces idiosyncratic volatility and downside tail risk and higher ESG ratings have lower associated firm-specific volatility and downside tail risk during the first year of trading in the aftermarket. We provide theoretical arguments for the relationships observed, suggesting that companies striving for ESG performance and communicating their efforts signal their compliance with sustainability-related norms, thus acquiring and upholding a societal license to operate. ESG performance and disclosure help companies build their reputation capital with investors after going public. We also report that ESG disclosure is a more consistent proxy for ex-ante uncertainty as an indicator of aftermarket risk, thereby replacing some of the more conventional measures, such as firm age, offered in the existing literature. (shrink)

This study examines the volatility risk for firms that are rated high on environmental, social, and governance (ESG) dimensions in emerging markets and developed markets outside the United States and Canada. Employing the Morgan Stanley Capital International (MSCI) ESG Leader indices, this study investigates the impact of good news and bad news on the volatility risk for the highest ESG-rated firms through multivariate DCC-EGARCH modeling. This study finds that the impact of a negative news shock of size 2 standard deviations (...) is approximately 45% higher than that of a positive news shock of the same size for the case of the developed markets under interest. With respect to emerging markets, this study reports that the impact of a negative news shock of size 2 standard deviations is 41% higher than that of a positive news shock of the same size. The results provide empirical evidence in support of the hypothesis that the volatility impact of news for high ESG-rated firms in developed markets and emerging markets is larger for bad news compared to good news, and the results are robust across time. The empirical findings underline the importance of reporting-related disclosures of ESG initiatives, and provide seminal evidence of a slow response to news by high ESG-rated firms in emerging markets. (shrink)

We investigate how conventional asset managers account for environmental, social, and governance factors in their investment process. We do so on the basis of an international survey among fund managers. We find that many conventional managers integrate responsible investing in their investment process. Furthermore, we find that ESG information in particular is being used for red flagging and to manage risk. We find that many conventional fund managers have already adopted features of responsible investing in the investment process. Furthermore, we (...) argue and show that ESG investing is highly similar to fundamental investing. We also reveal that there is a substantial difference in the ways in which U.S. and European asset managers view ESG. (shrink)

This research examines how firms' environmental, social and governance (ESG) performance impacts their capacity utilisation using data from listed firms in China from 2009 to 2022. We find that firms' ESG performance significantly elevates their capacity utilisation with an inverted U-shaped relationship. All three dimensions of ESG—environmental performance, social responsibility and governance—positively affect capacity utilisation, addressing gaps in enhancing firms' capacity utilisation through ESG practices. We identify an indirect transmission channel through which firms' ESG practices influence capacity utilisation, marking a (...) pioneering discovery in our study. Using structural equation modelling (SEM), we confirm that firms' ESG practices enhance capacity utilisation by improving competitiveness and customer stickiness. Additionally, we discuss potential heterogeneity in the impact of ESG performance on capacity utilisation, considering factors such as ownership structure, industry, financial constraints and equity arrangements. Our findings provide insights for governments and companies aiming to incorporate ESG principles into their decision-making processes to enhance capacity utilisation. (shrink)

Stories about corporate social responsibility have become very frequent over the past decade, and managers can no longer ignore their impact on firm value. In this paper, we investigate the extent and the determinants of the stock market’s reaction following ordinary news related to environmental, social and governance issues—the so-called ESG factors. To that purpose, we use an original database provided by Covalence EthicalQuote. Our empirical analysis is based on about 33,000 ESG news, targeting one hundred listed companies over the (...) period 2002–2010. On average, firms facing negative events experience a drop in their market value of 0.1%, whereas companies gain nothing on average from positive announcements. We find also that market participants are responsive to the media, but they do not react to firms’ press releases or to NGOs’ disclosures. Moreover, our results indicate that sector’s reputation mitigates the loss and that cultural proximity and lexical contents of ESG disclosures play a significant role in the magnitude of the impact. (shrink)

Over the past decade, sustainable finance has been a topic of burgeoning significance for investors, and ESG ratings have become commonly used to implement ESG investment strategies in practice. Strikingly, it is widely documented in both academic literature and investment practices that ESG ratings of a given firm can be extremely different across rating providers. However, despite the disagreement in ESG ratings being subject to a lot of criticism, only few studies have examined the sources and determinants of rating divergence. (...) This study examines whether quantitative ESG disclosure is conducive to rating convergence among agencies. Based on ESG rating data of Chinese A-share listed companies, the author finds that greater quantitative ESG disclosure, especially disclosure on environmental and social pillars, results in greater divergence of ESG ratings. When employing a difference-in-differences design with a quasi-experiment of disclosure guidance introduced by Hong Kong Exchange, the results show that if ESG disclosure is standardized and comparable, more numerical information reduces agencies' rating disagreement instead. Further analyses show that the lack of agreement is related to a low rating in the future. The author also finds that the effect of quantified ESG disclosure on rating divergence is more pronounced when firms are single businesses rather than diversified businesses with poor ESG performance rather than good ESG performance. The results are robust to alternative measures of ESG rating divergence, alternative sample, two-way clustering, and additional control variables. Taken together, the results indicate that quantitative ESG disclosure degenerates rating disagreement. (shrink)

Wellbeing is classically considered a bi-product or externality of economic activity, which can either be positively or negatively influenced. This conventional view is returning to the fore in the face of renewed criticisms of ESG reporting standards as leading business astray from its core financial purpose. However, such reactivism overlooks the fact that wellbeing is the functional and overarching aim of human activity, which Aristotle defines as self-actualization. As such, any sound economic system must, in a fundamental way, enhance individual (...) and collective wellbeing. This essay calls for reinforcing social purpose commitments through a capitalism rooted in moral self-awareness in which the common good displaces profit as the sole function of business. According to this picture, profit maintains its proper place as the means of economic transactions, allowing social purpose to take up its proper place as business' central aim. (shrink)

The primary objective of this research is to examine the potential influence of environmental, social, and governance (ESG) disclosure on cash holdings. Additionally, the study explores the role of earnings management (EM) practices as a mediating factor in this relationship. The sample comprises 797 companies listed on financial markets across 19 European countries, and the data spans from 2013 to 2019. The outcomes indicate a significant negative correlation between ESG disclosure and cash holdings, implying that ESG performance can be used (...) by management to resolve disputes with stakeholders. The outcomes further indicate that the existence of EM practices partially mediates the link between ESG disclosure and cash holdings. Moreover, they are robust by substitute cash holdings specification, three distinct initiatives of ESG disclosure (i.e., environment, social, and governance), and a two-stage least squares assessment. Therefore, the findings document that nonfinancial reporting in the form of ESG disclosure can assist in controlling agency conflict, leading to better valuations of company performance by stakeholders. (shrink)

Using a sample of US stocks over the period 1991–2019, we test whether stocks with high exposure to a social index exhibit high returns. Using a univariate analysis, our in‐sample results show that stocks with high sensitivities to the MSCI KLD 400 Social Index underperform stocks with low sensitivities by an annual risk‐adjusted performance of 7.02%. The negative premium is also larger in the post‐crisis period of 2007–2019 and is equal to 10.25%. The out‐of‐sample results offer, however, only weak evidence (...) of such a finding, with a risk‐adjusted performance difference of merely −0.84% over the full sample period and no significant differences between the pre‐crisis and post‐crisis periods. In the multivariate regression, we find evidence of a negative relationship between exposure to the social index and stock performance. Moreover, we find that stocks with high exposure to the social index display a low corporate social responsibility score, a high Tobin’s Q, high long‐term debt, a large size, high total risk, a high market beta, a high SMB coefficient, a low HML coefficient, and a small MOM coefficient. (shrink)

This paper examines whether a firm’s financial performance is associated with superior environmental, social and governance scores in emerging markets of multinationals in Latin America. The study addresses the current research gap on this issue; it develops hypotheses and tests them by applying linear regressions with a data panel drawn from the Thomson Reuters Eikon™ database to analyse data on 104 multinationals from Brazil, Chile, Colombia, Mexico and Peru between 2011 and 2015. The results suggest that the relationship between the (...) ESG score and FP is significantly statistically negative. Furthermore, in examining environmental, social and governance separately to accurately determine each variable’s relationship to multilatinas’ FP, the results reveal a negative relationship. Finally, the empirical analysis provides evidence for a moderating effect of financial slack and geographic international diversification on the relationship between ESG dimensions and firms’ FP. This study furthers understanding of the relationship between ESG dimensions and FP for the Latin American business context. (shrink)

We investigate the association between a wide range of community-level environmental, social, and governance (ESG) outcomes and the credit risk of U.S. municipal finance fixed-income securities. We develop a novel dataset of multiple ESG outcomes for U.S. counties and connect it to a 2001-2020 panel of municipal bonds issued within those counties. Overall, we find supportive evidence that collective increases in community-level ESG factors (i.e., ESG outcomes) are associated with reductions in credit risk for U.S. municipal finance instruments over time. (...) We theorize that these associations arise from variations in investor perceptions and manifested changes in fiscal health over time as a function of changing ESG outcomes. Post hoc analyses leveraging quasi-exogenous shocks to uncertainty, as well as connecting ESG outcomes to various measures of fiscal health at the county-year level, and credit ratings at the bond-year level, help validate this theory. Our research suggests that even socially agnostic investors should investigate the environmental and social performance of a municipality as part of their credit due diligence. (shrink)

Dieser Quick Guide gibt einen Überblick über Compliance, ESG und Investigations in Emerging Markets im Kontext wachsender Anforderungen wie des deutschen Lieferkettensorgfaltspflichtengesetzes und EU-Verordnungen. Deutsche Unternehmen sind durch neue Regelungen, besonders in Emerging Markets, mit verstärkten Sorgfalts-, Dokumentations- und Berichterstattungspflichten konfrontiert. Dieser Leitfaden beleuchtet diese Herausforderungen und zeigt, wie On-Site Audits effizient durchgeführt werden können. Der Inhalt: Einführung Anknüpfungspunkte: Due Diligence, Supply Chain Compliance, Nachhaltigkeitsberichterstattung, Korruptionsvermeidung Betroffene Kreise: Unternehmen, Tochtergesellschaften, Zulieferer, Dritte Organisation von On-Site Audits Zusammenfassung und Ausblick Die Zielgruppen (...) CEOs, CFOs, Rechtsabteilungsleiter, Compliance-Beauftragte, Beschaffungsmitarbeiter, Rechtsanwälte Die Autoren: RA Dr. Constantin Frank-Fahle, LL.M., Gründungspartner (emltc), spezialisiert auf rechtliche und steuerliche Strukturierung von Auslandsinvestitionen. RA Roland Falder, Counsel (emltc), spezialisiert auf Arbeitsrecht und Compliance Untersuchungen. RA'in Dr. Anna-Luisa Lemmerz, Counsel (emltc), spezialisiert auf Handels- und Gesellschaftsrecht sowie Compliance. (shrink)

The study investigates the effects of ESG washing on banks' reputational exposure. We define ESG washing as a disparity between a bank's environmental and social disclosure level and the practical implementation of the relative measures. The analysis involves an international sample of 120 banks operating across 35 countries from 2014 to 2020. The results evidence a different effect based on the pillar considered: the higher the inconsistency on environmental issues, the higher a bank's reputational exposure. Conversely, higher levels of disclosure (...) compared to performance on social issues appear to reduce reputational exposure. In addition, citizen movements and the country's legal system play a significant role in amplifying or mitigating a bank's reputational exposure. Our findings offer insight into the phenomenon of ESG washing in the banking industry, supporting the need for more verified information across countries and all economic sectors. (shrink)

This study investigates the impact of economic uncertainty on information asymmetry and ESG (Environmental, Social, and Governance) controversies within companies, while exploring the moderating role of digital integration. By analyzing a panel of 1303 companies across 20 European countries from 2016 to 2023, and employing the two-stage generalized method of moments (GMM) and two-stage least squares (2SLS) for robustness tests, the research reveals that economic uncertainty, as measured by the Economic Policy Uncertainty (EPU) index, exacerbates information asymmetry and heightens ESG (...) controversies. However, the adoption of digital technologies mitigates these adverse effects by enhancing transparency and reducing the likelihood of opportunistic behavior. Theoretically, this research contributes to the understanding of how digitalization can reinforce corporate governance and sustainability in uncertain times. Practically, the findings suggest that companies should accelerate their digitalization efforts to safeguard against the destabilizing effects of economic uncertainty, while bolstering their governance and social responsibility performance. (shrink)

Artificial intelligence (AI) governance and auditing promise to bridge the gap between AI ethics principles and the responsible use of AI systems, but they require assessment mechanisms and metrics. Effective AI governance is not only about legal compliance; organizations can strive to go beyond legal requirements by proactively considering the risks inherent in their AI systems. In the past decade, investors have become increasingly active in advancing corporate social responsibility and sustainability practices. Including nonfinancial information related to environmental, social, and (...) governance (ESG) issues in investment analyses has become mainstream practice among investors. However, the AI auditing literature is mostly silent on the role of investors. The current study addresses two research questions: (1) how companies’ responsible use of AI is included in ESG investment analyses and (2) what connections can be found between principles of responsible AI and ESG ranking criteria. We conducted a series of expert interviews and analyzed the data using thematic analysis. Awareness of AI issues, measuring AI impacts, and governing AI processes emerged as the three main themes in the analysis. The findings indicate that AI is still a relatively unknown topic for investors, and taking the responsible use of AI into account in ESG analyses is not an established practice. However, AI is recognized as a potentially material issue for various industries and companies, indicating that its incorporation into ESG evaluations may be justified. There is a need for standardized metrics for AI responsibility, while critical bottlenecks and asymmetrical knowledge relations must be tackled. (shrink)

Drawing on the upper echelon theory, this paper explores the relationship between CEO ability and ESG responsibility fulfillment. Based on this, it further explores the mediating role of organizational resilience and the moderating role of environmental uncertainty. Using data from Chinese A-share-listed manufacturing companies from 2010 to 2020, we find that CEO ability promotes ESG responsibility fulfillment, and organizational resilience mediates this relationship. Furthermore, the promotion effect of CEO ability on ESG responsibility fulfillment through organizational resilience is stronger under high (...) environmental uncertainty. Additionally, the influence of CEO ability on ESG responsibility fulfillment is more pronounced in non-state-owned enterprises and low environmental sensitivity industries. Our study opens the “black box” of the mechanism between CEO ability and ESG responsibility fulfillment and provides practical implications for organizations, managers, and policymakers to promote ESG responsibility fulfillment. (shrink)

This study seeks to shed light on the effect of star CEOs on the environmental, social, and governance (ESG) performance of Chinese firms. Relying on the theoretical perspective of role identity and role constraints, we analyze data from 1222 Chinese firms listed on the Shanghai and Shenzhen Stock Exchanges from 2006 to 2019. The results analyzed using the ordinary least squares estimate method reveal a positive effect of star CEOs' extreme confidence and legitimacy pressure mechanisms on ESG performance. We also (...) find that this positive relationship is negatively moderated by higher organizational slack but strengthened by a lower level of regional marketization, as the degree of firms' dependence on external stakeholders' resources differs significantly. Additionally, this study finds that ESG activities are less likely to be associated with firm performance if star CEOs pursue them to satisfy their need for star status. These findings supplement the early tests of the influence mechanism of star CEOs on organization-level results and expand the context discussion of role identity and role constraints theory in the Chinese institutional environment. (shrink)