Do ESG Controversies Influence Firm Value? An Analysis with Longitudinal Data in Different Countries

Abstract

This study aims to analyze the influence of ESG controversies on the value of companies. Annual data from 6,325 companies from 61 countries between 2002 and 2020 were analyzed. In the econometric model developed, the indices prepared by Refinitiv®, made available through the Eikon platform, were used as ESG controversies, in addition to the three variables as proxies of company value: Tobin’s Q, Market-to-Book, and Market Capitalization. The results indicate a negative relationship between ESG controversies, and the value of companies measured by Tobin’s Q and Market Capitalization proxies. Considering that the value of a firm represents the estimation of returns, our findings corroborate the view that controversies produce negative effects on the evaluation of future results. It contributes to the literature by demonstrating that ESG controversies affect companies based on global analysis and a deepening understanding of the impacts of corporate irregularities.