Firms and social responsibility: A review of ESG and CSR research in corporate finance

Abstract

firms and social responsibility: a review of esg and csr research in corporate finance stuart l. gillan∗ g. brint ryan college of business andrew koch† katz graduate school of business university of north texas university of pittsburgh laura t. starks‡ mccombs school of business university of texas september 9, 2020 abstract we review the financial economics-based research on environmental, social, and governance (esg) and corporate social responsibility (csr) with an emphasis on corporate finance. in doing so we focus on the most debated and researched issues. although a firms esg/csr profile and activities are shown to be strongly related to the firms market, leadership and owner characteristics as well its risk, performance and value, there still exist conflicting hypotheses and results that we show are not resolved, leading to continued questions and a need for more research. keywords: environmental, social, governance, esg, corporate social responsibility, csr ∗stuart.gillan@unt.edu †awkoch@pitt.edu ‡lstarks@mail.utexas.edu 1 introduction the extent to which corporations benefit or harm social welfare has received increasing attention from many quarters. corporate actions in this arena are often referred to as environmental, social and governance (esg), or corporate social responsibility (csr).1 interest in esg/csr from the corporate perspective is indicated by the governance & accountability institute which, in 2018, reported that 86 percent of s&p 500 firms released …

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