Beyond Profits: The Role of Executive Rewarding in Shaping ESG Metrics. An Empirical Study of Europe’s Largest publicly-listed Companies
(2024) BUSN79 20241Department of Business Administration
- Abstract
- Purpose: This study examines how policies rewarding sustainable initiatives affect ESG scores in European firms and how these dynamics are influenced by a nation's Environmental Performance Index (EPI). It aims to contribute to the ongoing dialogue on sustainable and responsible business practices in Europe and beyond.
Methodology: The study employs Fixed-effects Ordinary Least Squares (OLS) regressions to test hypotheses derived from a theoretical framework. Historical data from the STOXX 600, covering 2018 to 2022 and spanning 19 European countries, provides a comprehensive view of the region's business landscape. Data is gathered from reputable sources including Refinitiv Eikon, and Bloomberg Terminal for variables such as ESG... (More) - Purpose: This study examines how policies rewarding sustainable initiatives affect ESG scores in European firms and how these dynamics are influenced by a nation's Environmental Performance Index (EPI). It aims to contribute to the ongoing dialogue on sustainable and responsible business practices in Europe and beyond.
Methodology: The study employs Fixed-effects Ordinary Least Squares (OLS) regressions to test hypotheses derived from a theoretical framework. Historical data from the STOXX 600, covering 2018 to 2022 and spanning 19 European countries, provides a comprehensive view of the region's business landscape. Data is gathered from reputable sources including Refinitiv Eikon, and Bloomberg Terminal for variables such as ESG metrics, executive compensation, firm size, and financial performance. Additionally, data on the EPI is sourced from its official website.
Theoretical perspectives: The theoretical framework explores how executive compensation aligns with both shareholder and stakeholder interests, influenced by Agency and Stakeholder theories. Institutional Theory highlights regulatory and societal pressures shaping ESG performance measurement, with the EPI guiding policy makers toward sustainable practices.
Empirical foundation: Results demonstrate that ESG-linked executive compensation policies significantly enhance overall ESG performance, particularly in the Environmental and Social dimensions. Furthermore, it finds that the effectiveness of these policies is heightened in countries with higher EPI scores.
Conclusions: This research underscores the effectiveness of ESG-linked compensation policies in enhancing corporate sustainability performance. It confirms the importance of institutional context and sector-specific approaches, advocating for broader application of performance-based incentives aligned with sustainability goals. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9168468
- author
- Stosik, Jan LU and Björk, Axel LU
- supervisor
- organization
- course
- BUSN79 20241
- year
- 2024
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- ESG, policy rewarding, CSR, Agency Theory, Institutional Theory
- language
- English
- id
- 9168468
- date added to LUP
- 2024-08-07 16:50:13
- date last changed
- 2024-08-07 16:50:13
@misc{9168468,
abstract = {{Purpose: This study examines how policies rewarding sustainable initiatives affect ESG scores in European firms and how these dynamics are influenced by a nation's Environmental Performance Index (EPI). It aims to contribute to the ongoing dialogue on sustainable and responsible business practices in Europe and beyond.
Methodology: The study employs Fixed-effects Ordinary Least Squares (OLS) regressions to test hypotheses derived from a theoretical framework. Historical data from the STOXX 600, covering 2018 to 2022 and spanning 19 European countries, provides a comprehensive view of the region's business landscape. Data is gathered from reputable sources including Refinitiv Eikon, and Bloomberg Terminal for variables such as ESG metrics, executive compensation, firm size, and financial performance. Additionally, data on the EPI is sourced from its official website.
Theoretical perspectives: The theoretical framework explores how executive compensation aligns with both shareholder and stakeholder interests, influenced by Agency and Stakeholder theories. Institutional Theory highlights regulatory and societal pressures shaping ESG performance measurement, with the EPI guiding policy makers toward sustainable practices.
Empirical foundation: Results demonstrate that ESG-linked executive compensation policies significantly enhance overall ESG performance, particularly in the Environmental and Social dimensions. Furthermore, it finds that the effectiveness of these policies is heightened in countries with higher EPI scores.
Conclusions: This research underscores the effectiveness of ESG-linked compensation policies in enhancing corporate sustainability performance. It confirms the importance of institutional context and sector-specific approaches, advocating for broader application of performance-based incentives aligned with sustainability goals.}},
author = {{Stosik, Jan and Björk, Axel}},
language = {{eng}},
note = {{Student Paper}},
title = {{Beyond Profits: The Role of Executive Rewarding in Shaping ESG Metrics. An Empirical Study of Europe’s Largest publicly-listed Companies}},
year = {{2024}},
}