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Investment in ESG Projects and Corporate Performance of Multinational Companies

Author

Listed:
  • Cherkasova, Victoria

    (National Research University Higher School of Economics (NRU HSE), Russia)

  • Nenuzhenko, Irina

    (National Research University Higher School of Economics (NRU HSE), Russia)

Abstract

This study investigates whether investing in environmental, social, and governance (ESG) projects boosts corporate financial performance. It also examines whether these projects trigger the company’s default due to the high costs of such projects, depending on whether the firm is multinational and its headquarter region. To obtain robust results, we conduct the examination separately for seven regions: North America, Latin America, Western Europe, Eastern Europe, Middle East and Africa, emerging Asia, and Developed Asia. We examine firm-level indicators of 1,249 companies and are headquartered in different regions for 2011-2019. We find that the company’s headquarter region influences the interrelationship between financial performance and ESG activities. The most successful companies in ESG development are international companies and those headquartered in developing or Developed Asia or North America. Meanwhile, Latin American firms, both local and multinational, experience significant challenges during the implementation of ESG initiatives.

Suggested Citation

  • Cherkasova, Victoria & Nenuzhenko, Irina, 2022. "Investment in ESG Projects and Corporate Performance of Multinational Companies," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 37(1), pages 54-92.
    • Handle: RePEc:ris:integr:0844
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    Citations

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    Cited by:

    1. Costantiello, Alberto & Leogrande, Angelo, 2023. "The Role Of Gdp Growth In The Esg Approach At World Level," SocArXiv r56hu, Center for Open Science.
    2. Gafni, Dalit & Palas, Rimona & Baum, Ido & Solomon, Dov, 2024. "ESG regulation and financial reporting quality: Friends or foes?," Finance Research Letters, Elsevier, vol. 61(C).
    3. Jorge Antunes & Peter Wanke & Thiago Fonseca & Yong Tan, 2023. "Do ESG Risk Scores Influence Financial Distress? Evidence from a Dynamic NDEA Approach," Sustainability, MDPI, vol. 15(9), pages 1-32, May.

    More about this item

    Keywords

    ESG projects; international companies; financial performance; default likelihood; headquarters;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F30 - International Economics - - International Finance - - - General
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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