The ESG Performance and Business Operational Risk
(2024) NEKN02 20241Department of Economics
- Abstract
- Purpose: This paper aims to find a piece of empirical evidence explaining the relationship between the target firm’s ESG score and business operation risk.
Methodology: This paper not only uses the benchmark regression method to explore the direct impact, mechanism, and boundary conditions of corporate ESG performance on operating risks, but also further explores the impact of ESG scores on operating risks, mechanism, and heterogeneity of difference of regional and enterprise size.
Theoretical perspectives: The theoretical frameworks used to support the empirical findings of this paper rely on Sustainable Development Theory, Corporate Governance Theory, Asymmetric Information Theory and Signal Theory.
Empirical foundation: This... (More) - Purpose: This paper aims to find a piece of empirical evidence explaining the relationship between the target firm’s ESG score and business operation risk.
Methodology: This paper not only uses the benchmark regression method to explore the direct impact, mechanism, and boundary conditions of corporate ESG performance on operating risks, but also further explores the impact of ESG scores on operating risks, mechanism, and heterogeneity of difference of regional and enterprise size.
Theoretical perspectives: The theoretical frameworks used to support the empirical findings of this paper rely on Sustainable Development Theory, Corporate Governance Theory, Asymmetric Information Theory and Signal Theory.
Empirical foundation: This paper uses China's Shanghai and Shenzhen A-share listed companies from 2013 to 2022 as a research sample, the ESG data was collected from Sino-securities Index Information Service.
Conclusions: Research shows that improving corporate ESG performance will significantly reduce the operating risks faced by companies, and its role is more prominent in small-scale companies and central regions. Mechanism testing confirms that mitigating agency conflicts, increasing corporate spending on management fees, and optimizing management structures are the core mechanisms through which ESG performance affects corporate operating risks. (Less) - Popular Abstract
- This paper delves into the relationship between a company's Environmental, Social, and Governance (ESG) score and its operational risk, offering valuable insights into the dynamics shaping corporate sustainability and risk management. By utilizing a blend of theoretical frameworks, the research employs a robust methodology encompassing benchmark regression analysis. This approach not only explores the direct impact of ESG performance on operating risks but also delves into the underlying mechanisms and boundary conditions shaping this relationship. The findings underscore a significant correlation between enhanced ESG performance and reduced operational risks, with particularly pronounced effects observed in small-scale enterprises and... (More)
- This paper delves into the relationship between a company's Environmental, Social, and Governance (ESG) score and its operational risk, offering valuable insights into the dynamics shaping corporate sustainability and risk management. By utilizing a blend of theoretical frameworks, the research employs a robust methodology encompassing benchmark regression analysis. This approach not only explores the direct impact of ESG performance on operating risks but also delves into the underlying mechanisms and boundary conditions shaping this relationship. The findings underscore a significant correlation between enhanced ESG performance and reduced operational risks, with particularly pronounced effects observed in small-scale enterprises and central regions. Mechanism testing reveals that mitigating agency conflicts, bolstering spending on management fees, and optimizing management structures emerge as central mechanisms through which ESG performance influences operational risk. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9156651
- author
- Song, Baiyi LU
- supervisor
- organization
- course
- NEKN02 20241
- year
- 2024
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- ESG · Operation risk · Principal-agent theory · Asymmetric information · Corporate social responsibility
- language
- English
- id
- 9156651
- date added to LUP
- 2024-08-12 15:59:19
- date last changed
- 2024-08-12 15:59:19
@misc{9156651,
abstract = {{Purpose: This paper aims to find a piece of empirical evidence explaining the relationship between the target firm’s ESG score and business operation risk.
Methodology: This paper not only uses the benchmark regression method to explore the direct impact, mechanism, and boundary conditions of corporate ESG performance on operating risks, but also further explores the impact of ESG scores on operating risks, mechanism, and heterogeneity of difference of regional and enterprise size.
Theoretical perspectives: The theoretical frameworks used to support the empirical findings of this paper rely on Sustainable Development Theory, Corporate Governance Theory, Asymmetric Information Theory and Signal Theory.
Empirical foundation: This paper uses China's Shanghai and Shenzhen A-share listed companies from 2013 to 2022 as a research sample, the ESG data was collected from Sino-securities Index Information Service.
Conclusions: Research shows that improving corporate ESG performance will significantly reduce the operating risks faced by companies, and its role is more prominent in small-scale companies and central regions. Mechanism testing confirms that mitigating agency conflicts, increasing corporate spending on management fees, and optimizing management structures are the core mechanisms through which ESG performance affects corporate operating risks.}},
author = {{Song, Baiyi}},
language = {{eng}},
note = {{Student Paper}},
title = {{The ESG Performance and Business Operational Risk}},
year = {{2024}},
}