Environmental, social and governance (ESG) scores and financial performance of multilatinas: moderating effects of geographic international diversification and financial slack

This paper examines whether a firm’s financial performance (FP) is associated with superior environmental, social and governance (ESG) 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 a...

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Bibliographic Details
Authors: Duque, Eduardo (Author) ; Aguilera Caracuel, Javier (Author)
Format: Electronic Article
Language:English
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Published: Springer Science + Business Media B. V 2021
In: Journal of business ethics
Year: 2021, Volume: 168, Issue: 2, Pages: 315-334
Further subjects:B Geographic international diversification
B ESG performance
B Environmental, social and governance dimensions
B Emerging market multinationals
B Multilatinas
B ESG score
B Aufsatz in Zeitschrift
B Financial slack
B Financial Performance
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520 |a This paper examines whether a firm’s financial performance (FP) is associated with superior environmental, social and governance (ESG) 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. 
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