Mirel Tatomir defends her PhD thesis
Mirel Tatomir defends the PhD thesis: "An Economic Exploration of Firm-Level ESG Performance in Europe, Asia, and the US".
The PhD project is co-financed with SDC
The PhD project is a double degree with UCAS, China
You can participate at 真人线上娱乐 University or online via Zoom.
The dissertation will be available for reading at the 真人线上娱乐 University Library before the defence (on-site use). The dissertation will also be available at the defence.
The defence is public, and everybody is welcome; the defence is scheduled for a maximum of three hours and will be held in English.
Department of Social Sciences and Business will host a small reception afterwards
Supervisors and assessment
Assessment commitee:
- Slobodan Kacanski, Associate Professor, ISE, 真人线上娱乐 University, Denmark (chairperson)
- Zhao Hong, Professor, University of Chinese Academy of Sciences, China
- Patrick Haack, Professor, University of Lausanne, Switzerland
- Caroline Aggestam Pontoppidan, Associate Professor, Copenhagen Business School, Denmark
- Ioannis Bournakis, Associate Professor, SKEMA Business School, France
Supervisors:
- Supervisor: Johannes Dreyer, Associate Professor, Department of Social Sciences and Business, 真人线上娱乐 University
- Co-supervisor: Kristian Sund, Professor (MSO), Department of Social Sciences and Business, 真人线上娱乐 University
- Co-supervisor: Jiang Yu, Professor, University of Chinese Academy of Sciences
Head of defence:
- Lena Brogaard, Associate Professor, Department of Social Sciences and Business, 真人线上娱乐 University
Abstract
For well over 30 years, environmental, social, and governance (ESG) considerations have gained increasing public attention and attracted significant interest from scholars across different fields of study. Typically, research has centered on determining if investing in such practices is beneficial to firm performance. In this regard scholars have debated the stakeholder versus
shareholder perspective which was fundamental in the formation and evolution of empirical literature within corporate finance and strategic management. Given that these practices are now considered an integral part of firm operations, research focus should be redirected to stakeholder and shareholder perspective as a steady stream of literature suggests investors are increasingly interested in and prefer responsible firms. Empirical findings on the ESG–firm performance relationship remain
inconclusive. Many scholars attribute this to differences in geographic, industry, and temporal contexts. Yet, limited studies seem to consider what is the underlying explanation that would lead to differences in the ESG–firm performance relationship. This dissertation proposes that the relationship changes in the context of investor behavior and perception in relation to geographic, industry, and temporal contexts. The aim of this dissertation is to (1) advance the understanding of the factors that
influence this relationship from a firm-level perspective, proposing the warm-glow theory as a possible theoretical explanation, and (2) answer the call for further research to find salient patterns of the ESG–firm performance relationship from new empirical contexts, without increasing methodological heterogeneity. The research objective is to address the overarching research question of the association of ESG to firm performance and how this is dependent on investor behavior and
perception regarding time, region, and industry, as collectively addressed across five papers in this dissertation.
In Paper 1, the aim is to review and analyze the methodological and industry-specific contexts of studies investigating the relationship between ESG and firm performance. Following a systematic literature review method as outlined by Kraus et al. (2020) and Tranfield et al. (2003), I review 45 empirical studies of ESG and firm performance within an industry-specific context. The findings of the review show that these studies vary in terms of research instrument, measures of firm
performance, ESG factor, control variables, industry of operation, and explanatory mechanism for industry effect (or lack thereof). The findings of the review show that few scholars follow a standardized research framework to systematically investigate this phenomenon. The implications are that methodological heterogeneity must be considered prior to making any generalizations about the ESG–firm performance relationship within an industry-specific context. Based on this, I develop a research framework for critical analysis of the ESG–firm performance relationship and highlight the above-mentioned factors and how they contribute to the findings. Following a survey of the literature and based on the theoretical and methodological issues presented, this paper concludes with suggestions for future research (such as linking theory to practice,
consideration of ESG dimensionality, and analyzing economic implications, to name but a few).
In Paper 2, I conduct a methodological quasi-replication of Nollet, Filis, and Mitrokostas’ (2016) “Corporate social responsibility and financial performance: A non-linear and disaggregated approach,” and empirically test the relationship between ESG and firm performance in new geographic and temporal contexts. This paper investigates a sample of 264 Nordic firms across
seven industries for the period 2002– 2019. The findings suggest a possible alignment of investor preferences with stakeholder interests for the Nordic region; lower risk-adjusted returns indicate that investors have a preference for firms with a high ESG, with little variation in ESG-operating performance. At the industry level, I observe that stock performance remains consistently negative (lower risk-adjusted returns) (with a few industries exception of no statistically significant effects), while operating performance has a negative or not statistically significant relationship in all but one industry (manufacturing). At the country level, I observe positive effects of ESG on operating performance consistently across Denmark and Norway, and negative effects of ESG on stock performance across the Nordics. This paper contributes to the literature by rationalizing these findings
with the warm-glow theory. The paper suggests that investor interests seem to be converging with those of stakeholders as they may be deriving utility for firms with a high ESG in a region that is considered highly developed in responsible practices. As a consequence, the paper suggests firms should be incentivized to invest in ESG.
In Paper 3, I provide new insights into the geographic and industrial contexts of the ESG–firm performance relationship. I conduct a methodological quasireplication of Nollet, Filis, and Mitrokostas (2016) using a focused study of the manufacturing and services sector. My sample includes 3,245 firms across the US, Europe, and Asia for the period 2002–2020. This study proposes that the perception of greenwashing is a determinant of the ESG–firm performance relationship.
Specifically, I test the ESG–firm performance relationship in order to find the key indicators for sectors perceived to be greenwashing: (1) higher operating performance and (2) higher risk-adjusted returns. For the services sector, I find no evidence that would indicate a perception of greenwashing. For the manufacturing sector, I find mixed results across regions. Notably for the US, results exhibit these indicators considered to be in line with the perception of greenwashing.
In Paper 4, I provide new insights into the geographic, industrial, and temporal contexts of the ESG–firm performance relationship. I conduct a methodological quasi-replication of Nollet, Filis, and Mitrokostas (2016) using a focused study of the banking industry. For this study, the sample includes 882 firms across the US, Europe, and Asia for the period 2002–2020. In this paper I investigate how the ESG–firm performance relationship changes in time, specifically comparing periods of normal uncertainty to periods of high uncertainty. This study finds that the ESG–stock performance relationship changes during periods across time. During periods of normal uncertainty, lower risk-adjusted returns suggest that investors prefer a high ESG. During periods of high uncertainty, higher risk-adjusted returns suggest the contrary. The ESG-operating performance shows
little to no variation across time. In sum, I find that the ESG–firm performance relationship is partially contingent on investors’ perception in time, particularly in times of high uncertainty.
In Paper 5, I examine the methodology of the Asset4 ESG score. This paper highlights that the ESG score was developed to facilitate responsible investment decision-making but has since evolved to provide insights into the responsible practices of the firm to other stakeholders as well. The purpose of this paper is to understand the functionality of the Asset4 ESG score with a detailed account of underlying data. Subsequently, this paper reflects on the methodological challenges as they pertain to validity and reliability. As a consequence of the methodological limitations presented in this paper, I argue the potential for the emergence of perverse economic incentives and state the need for more in-depth analyses of the underlying data.
The main finding and key contribution of this dissertation is that the dynamics of the ESG–firm performance relationship are dependent on investor preference in relation to geographic, industrial, and temporal contexts. There appears to be an alignment of investor preferences with stakeholder interests as investors increasingly show a preference for responsible firms. This is, however, contingent on investors’ perceptions as they relate to geographic, industrial, and temporal contexts. This highlights the importance of understanding why the ESG–firm performance relationship may change and, additionally, the importance of the reliability of the ESG score. This dissertation addresses a variety of theoretical and practical implications and develops directions for more in-depth future research.
Directions
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