ESG reputational risk, corporate payouts and firm value

Chasiotis, Ioannis, Gounopoulos, Dimitrios, Konstantios, Dimitrios and Patsika, Victoria ORCID: https://orcid.org/0000-0002-5763-2020 2023. ESG reputational risk, corporate payouts and firm value. British Journal of Management 10.1111/1467-8551.12745

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Abstract

This study explores the relationship between ESG reputational risk, corporate payouts and firm value. Using a sample of 2021 US‐listed firms between 2007 and 2019, we provide robust evidence that ESG reputational risk relates to higher payouts, and that free cash flows amplify this relationship. Turning to payout composition, we document that ESG reputational risk associates with a payout mix comprising a higher analogy of share repurchases versus dividends; and that this relationship is more pronounced under financial constraints. Furthermore, we show that the market places a premium on payouts from high ESG reputational risk firms. Our findings are in line with the notion that ESG reputational risk represents agency problems and raises financial risk, inducing firms to disgorge cash via a more flexible payout regime. Results are robust to several estimation techniques that address endogeneity, self‐selection and censored observations.

Item Type:	Article
Date Type:	Published Online
Status:	Published
Schools:	Business (Including Economics)
Additional Information:	License information from Publisher: LICENSE 1: URL: http://creativecommons.org/licenses/by/4.0/
Publisher:	Wiley
ISSN:	1045-3172
Date of First Compliant Deposit:	10 July 2023
Date of Acceptance:	9 June 2023
Last Modified:	06 Jan 2024 04:31
URI:	https://orca.cardiff.ac.uk/id/eprint/160927

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