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The ESG Disclosure and the Financial Performance of Norwegian Listed Firms

Author

Listed:
  • George Giannopoulos

    (Kingston Business School, Kingston University, Kingston Hill, Kingston upon Thames, London KT2 7LB, UK)

  • Renate Victoria Kihle Fagernes

    (Kingston Business School, Kingston University, Kingston Hill, Kingston upon Thames, London KT2 7LB, UK)

  • Mahmoud Elmarzouky

    (Kingston Business School, Kingston University, Kingston Hill, Kingston upon Thames, London KT2 7LB, UK)

  • Kazi Abul Bashar Muhammad Afzal Hossain

    (Kingston Business School, Kingston University, Kingston Hill, Kingston upon Thames, London KT2 7LB, UK)

Abstract

The world is constantly changing, and with an evolving global environmental crisis, there is a growing trend of Corporate Social Responsibility, and Environmental, Social, and Governance (ESG) disclosure initiatives. The final report on the new E.U. taxonomy for sustainable activities was released in 2020, making ESG disclosure more relevant. This paper investigates the effects of ESG initiatives on the financial performance of Norwegian listed companies from 2010 to 2019. ESG is measured through the Thomson Reuters Eikon ESG disclosure score and financial performance through ROA and Tobin’s Q. To the best of our knowledge, this is the first time this relationship has been investigated in Norway. Using panel data regression analysis and two proxies for the dependent variable (financial performance), the results of this study are mixed. In particular, findings suggest a strong significant relationship between ESG initiatives and financial performance. More specifically, the regression model, with ROA as the dependent variable, suggests that ESG initiatives have a clear negative impact. On the other hand, the variable Tobin’s Q increases when ESG increases. This could be explained by the different horizons of the measures and other factors affecting the business environment.

Suggested Citation

  • George Giannopoulos & Renate Victoria Kihle Fagernes & Mahmoud Elmarzouky & Kazi Abul Bashar Muhammad Afzal Hossain, 2022. "The ESG Disclosure and the Financial Performance of Norwegian Listed Firms," JRFM, MDPI, vol. 15(6), pages 1-16, May.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:6:p:237-:d:824530
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    References listed on IDEAS

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    4. Anggita Langgeng WIJAYA & Ima Widha RATNASARI, 2023. "The Effect of the Audit Committee on the Firm Value of State-Owned Enterprises in Indonesia: The Mediation Role of Financial Performance," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 4(6), pages 60-72, June.
    5. Heonyong JUNG, 2024. "The Moderating Effect Of Board Characteristics In The Relationship Between Esg And Corporate Financial Performance," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 19(2), pages 110-119, August.
    6. Xinxin Che & Chenhua Song & Jining Li, 2024. "How Do Corporate Environmental, Social, and Governance (ESG) Factors Affect Financial Performance?," Sustainability, MDPI, vol. 16(23), pages 1-24, November.
    7. Yu‐Chuan Chen & Tai‐Yu Lin & Yung‐ho Chiu & Ching‐I Yang, 2024. "An exploration of operational efficiency, market efficiency, and sustainable development in the banking industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4819-4848, September.
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    9. V. Veeravel & E. K. S. Sadharma & Bandi Kamaiah, 2024. "Do ESG disclosures lead to superior firm performance? A method of moments panel quantile regression approach," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 741-754, January.
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