1.
Journal of International Money and Finance
; : 102785, 2022.
Article
in English
| ScienceDirect | ID: covidwho-2150098
ABSTRACT
This study examines the association between firms’ ESG reputational risk and financial performance under the EU regulatory policy changes and the COVID-19 period. Analyzing a panel of 1,816 European listed firms during the period 2007-2021, we document evidence that firms with lower ESG reputational risk have reduced information asymmetry, are less financial constrained and perform better. To establish causality, we design a quasi-natural experiment focusing on the 2014/95/EU directive of non-financial disclosing and the COVID-19 exogenous shock. Our findings are robust to several estimation techniques that address endogeneity, self-selection, and model sensitivity.