Governmental and scientific news and insights on investor oriented environmental, social, and governance (ESG) data.

The Impact of Managerial Incentives on IPO Mortality

We find that IPO firms with generously compensated CEOs and large pay disparities between the CEO and other top executives have lower failure rates and longer time to survive in subsequent periods following the offering. Economically, firms with CEO pay (pay gaps) in the 75th percentile have a failure risk that is, on average, 11.56% [...]

By |2018-11-06T14:21:53+00:00November 6th, 2018|Firm Value, Governance|0 Comments

Zombie Board: Board Tenure and Firm Performance

We show that board tenure exhibits an inverted U‐shaped relation with firm value and accounting performance. The quality of corporate decisions, such as M&A, financial reporting quality, and CEO compensation, also has a quadratic relation with board tenure. Our results are consistent with the interpretation that directors’ on‐the‐job learning improves firm value up to a [...]

By |2018-11-06T14:19:40+00:00November 6th, 2018|Firm Value, Governance, Indicators|0 Comments

Assessing the Value Relevance of Mandatory Business Model Disclosures

Purpose – Extra-financial information and narrative reporting has long been portrayed as a way of enhancing the informativeness and usefulness of traditional financial reporting. Numerous more or less regulated reporting initiatives have seen the light in the last 25 years, and the latest examples are offered by the Strategic Report of the UK Companies Act [...]

By |2018-11-06T14:15:39+00:00November 6th, 2018|CSR, Firm Value, Governance, Law|0 Comments

The impact of environmental, social, and governance disclosure on firm value: The role of CEO power

Using a large cross-sectional dataset comprising of FTSE 350 listed firms, this study investigates whether superior environmental, social and corporate governance (ESG) disclosure affects firm value. We find a positive association between ESG disclosure level and firm value, suggesting that improved transparency and accountability and enhanced stakeholder trust play a role in boosting firm value. [...]

By |2018-11-06T14:08:17+00:00November 6th, 2018|ESG, Firm Value, Governance|0 Comments

Governance, Information Flow and Stock Returns: Evidence from a Natural Experiment

This paper shows that the relationship between corporate governance indices and stock returns has reappeared after a few years of its disappearance. We find that poor governance stocks have outperformed good governance stocks in recent years, indicating a directionally opposite relation to the one that existed in the past. To explain this puzzling reversal, we [...]

By |2018-06-28T12:41:46+00:00June 28th, 2018|ESG, Firm Value, Governance|0 Comments

CEO Tenure and Stock Returns Performance

This study shows that CEO tenure has positive and robust predictive power on cross-sectional stock returns. We show that a hedge portfolio constructed based on CEO tenure yields an annualised alpha of 1.32% and attribute this to seasoned CEOs having greater firm-specific knowledge and experience.  Consistent with this explanation, we find that CEO tenure has [...]

By |2018-03-02T11:24:36+00:00March 2nd, 2018|ESG, Firm Value, Governance, Indicators|0 Comments

The Effects of Environmental, Social and Governance Disclosures and Performance on Firm Value: A Review of the Literature in Accounting and Finance

This paper not only attempts to survey the burgeoning literature on environmental, social and governance disclosures and performance and their effects on firm value, but its focus also lies on highlighting stylised observations coming from the most recent work that has not yet become part of the ‘conventional wisdom’ in the field. In addition, it [...]

By |2017-11-18T13:01:08+00:00November 18th, 2017|ESG, Firm Value, Indicators, Investors|0 Comments

MSCI: Out of Whack – U.S. CEO Pay and Long-term Investment Returns

Last year, MSCI asked whether pay packages given to U.S. chief executive officers reflected long-term shareholder returns and found they did not.1 The bottom fifth of companies by equity incentive award outperformed the top fifth by nearly 39% on average on a 10-year cumulative basis. That study looked at awarded pay — of which 60%-70% [...]

By |2017-10-06T09:28:41+00:00October 6th, 2017|ESG, Firm Value, Governance, Investors|0 Comments

Investment Professionals’ Use of Corporate Social Responsibility Disclosures

We conduct an experiment to examine investment professionals’ use of corporate social responsibility (CSR) disclosures when making personal investment decisions or investment recommendations to clients. We predict and find that investment professionals are more willing to personally invest and recommend investment to a client when a firm discloses positive CSR performance than when it makes [...]

By |2017-09-01T09:07:36+00:00September 1st, 2017|CSR, ESG, Firm Value, Indicators, Investors|0 Comments

Corporate Environmental Policy and Shareholder Value: Following the Smart Money

We examine the value consequences of corporate social responsibility through the lens of institutional shareholders. We find a sharp asymmetry between corporate policies that mitigate the firm’s exposure to environmental risk and those that enhance its perceived environmental friendliness (“greenness”). Institutional investors shun stocks with high environmental risk exposure, which we show have lower valuations [...]

By |2017-09-01T09:04:03+00:00September 1st, 2017|Environmental, Firm Value, Indicators, Investors|0 Comments