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How bad is your company? Measuring corporate wrongdoing beyond the magic of ESG metrics

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  • Fiaschi, Davide
  • Giuliani, Elisa
  • Nieri, Federica
  • Salvati, Nicola

Abstract

Most attempts to measure corporate wrongdoing rely on data and indices sold by environmental, social, and governance (ESG) data providers. Developed for investors and market players, ESG data have been widely used in academia, but so far, little research has been conducted to assess and overcome the limitations of ESG indices. In this article, we take a first step in this direction and propose using an M-quantile regression approach to develop an index of corporate wrongdoing, understood as firms' involvement in controversies over universal human rights. We apply our proposed methodology to a novel and unique hand-collected dataset of 380 large publicly-listed firms from both advanced and emerging economies, covering the period 2003–2012. We discuss the importance of these indices for managers and practitioners.

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  • Fiaschi, Davide & Giuliani, Elisa & Nieri, Federica & Salvati, Nicola, 2020. "How bad is your company? Measuring corporate wrongdoing beyond the magic of ESG metrics," Business Horizons, Elsevier, vol. 63(3), pages 287-299.
    • Handle: RePEc:eee:bushor:v:63:y:2020:i:3:p:287-299
    DOI: 10.1016/j.bushor.2019.09.004
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    References listed on IDEAS

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    2. Natalia Semenova, 2023. "The Public Effect of Private Sustainability Reporting: Evidence from Incident-Based Engagement Strategy," Journal of Business Ethics, Springer, vol. 182(2), pages 559-572, January.
    3. Ioannis Passas & Konstantina Ragazou & Eleni Zafeiriou & Alexandros Garefalakis & Constantin Zopounidis, 2022. "ESG Controversies: A Quantitative and Qualitative Analysis for the Sociopolitical Determinants in EU Firms," Sustainability, MDPI, vol. 14(19), pages 1-17, October.
    4. De Novellis, G. & Musile Tanzi, P. & Ranalli, M.G. & Stanghellini, E., 2024. "Leveraged finance exposure in the banking system: Systemic risk and interconnectedness," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 90(C).
    5. María Iborra & Marta Riera, 2023. "Corporate social irresponsibility: What we know and what we need to know," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(3), pages 1421-1439, May.
    6. Federica Nieri & Priscilla Rodriguez & Luciano Ciravegna, 2023. "Corporate misconduct in GVCs: challenges and potential avenues for MNEs," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(1), pages 193-207, March.
    7. Natalia Semenova, 2021. "Management control systems in response to social and environmental risk in large Nordic companies," International Journal of Corporate Social Responsibility, Springer, vol. 6(1), pages 1-11, December.
    8. Elisa Giuliani & Annamaria Tuan & José Calvimontes Cano, 2021. "Creating Shared Value Meets Human Rights: A Sense-Making Perspective in Small-Scale Firms," Journal of Business Ethics, Springer, vol. 173(3), pages 489-505, October.
    9. Valentina Marchi & Gary Gereffi, 2023. "Using the global value chain framework to analyse and tackle global environmental crises," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(1), pages 149-159, March.
    10. Elisa GIULIANI, 2020. "Putting human rights into regional growth agendas: Where we stand and where we ought to go," Papers in Evolutionary Economic Geography (PEEG) 2042, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Sep 2020.
    11. Luciano Ciravegna & Federica Nieri, 2022. "Business and Human Rights: A Configurational View of the Antecedents of Human Rights Infringements by Emerging Market Firms," Journal of Business Ethics, Springer, vol. 179(2), pages 431-450, August.
    12. Jan Svanberg & Tohid Ardeshiri & Isak Samsten & Peter Öhman & Presha E. Neidermeyer & Tarek Rana & Natalia Semenova & Mats Danielson, 2022. "Corporate governance performance ratings with machine learning," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 29(1), pages 50-68, January.
    13. Anrafel de Souza Barbosa & Maria Cristina Crispim & Luiz Bueno da Silva & Jonhatan Magno Norte da Silva & Aglaucibelly Maciel Barbosa & Sandra Naomi Morioka, 2024. "How can organizations measure the integration of environmental, social, and governance (ESG) criteria? Validation of an instrument using item response theory to capture workers' perception," Business Strategy and the Environment, Wiley Blackwell, vol. 33(4), pages 3607-3634, May.
    14. Constantinescu Daniela, 2021. "Sustainability disclosure and its impact on firm's value for Energy and Healthcare industry," Central European Economic Journal, Sciendo, vol. 8(55), pages 313-329, January.

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