Effects of environmental, social and governance performance on value relevance of Brazilian companies
DOI:
https://doi.org/10.5007/2175-8069.2023.e86044Keywords:
ESG, Value Relevance, Brazilian CompaniesAbstract
This study aimed to analyze the relationship between environmental, social, and governance (ESG) performance and the relevance of accounting information of Brazilian companies. The research is descriptive, documentary, and quantitative. Its sample consists of 241 B[3] listed non-financial companies from 2015 to 2019. Its main findings show that ESG performance relates positively to the market-to-book (MTB) of the analyzed companies. Moreover, when testing the ESG pillars individually, we found that each of them also shows a positive relationship with the MTB of these companies so such information can be considered value relevant. We conclude, then, that engaging in ESG practices allows companies to demonstrate to their stakeholders their commitment to more responsible practices and, by doing so, make this information relevant to market participants, thus reflecting on their market value.
References
Aksu, M., Cetin, A. T. & Mugan, C. S. (2017). Value relevance of accounting data in an emerging market: did accounting reforms make a difference? Accounting and Corporate Reporting – Today and Tomorrow. https://doi.org/10.5772/intechopen.69103
Ali, I., Jimenez-Zarco, A. I. & Bicho, M. (2015). Using social media for CSR communication and engaging stakeholders. Corporate social responsibility in the digital age. Emerald Group Publishing Limited, 7, 165-185. https://doi.org/10.1108/S2043-052320150000007010
Ali, W., Frynas, J. G. & Mahmood, Z. (2017). Determinants of Corporate Social Responsibility (CSR) Disclosure in Developed and Developing Countries: A Literature Review. Corporate Social Responsibility and Environmental Management, 24(4), 273–294. https://doi.org/10.1002/csr.1410
Ball, R., & Brown, P. (1968). An Empirical Evaluation of Accounting Income Numbers. Journal of Accounting Research, 6(2), 159–178. https://doi.org/10.2307/2490232
Barth, M. E., Landsman & W. R.; Lang, M. H. (2008). International accounting standards and accounting quality. Journal of Accounting Research, 46(3), 467-498. https://doi.org/10.1111/j.1475-679X.2008.00287.x
Beisland, L. A. (2009). A review of the value relevance literature. The Open Business Journal, 2(1). https://doi.org/10.2174/1874915100902010007
Bortree, D. S. (2014). The state of CSR communication research: A summary and future direction. Public Relations Journal, 8(3), 1–8.
Brooks, C. & Oikonomou, I. (2018). The effects of environmental, social and governance disclosures and performance on firm value: A review of the literature in accounting and finance. British Accounting Review, 50(1), 1–15. https://doi.org/10.1016/j.bar.2017.11.005
Caulfield, P. A. (2013). The evolution of strategic corporate social responsibility. EuroMed Journal of Business, 8(3), 220–242. https://doi.org/10.1108/EMJB-05-2013-0030
Clarkson, P. M. Fang, X., Li, Y. & Richardson, G. (2013). Account Public Policy The relevance of environmental disclosures: Are such disclosures incrementally informative? Journal of Accounting and Public Policy, 32(5), 410–431. https://doi.org/10.1016/j.jaccpubpol.2013.06.008
Connelly, B. L. Certo, S. T., Ireland, R. D. & Reutzel, C. R. (2011) Signaling theory: A review and assessment. Journal of Management, 37(1), 39–67. https://doi.org/10.1177/0149206310388419
Cordazzo, M., Bini, L., & Marzo, G. (2020). Does the EU Directive on non?financial information influence the value relevance of ESG disclosure? Italian evidence. Business Strategy and the Environment, 29(8), 3470-3483. https://doi.org/10.1002/bse.2589
Cormier, D., & Magnan, M. (1999). Corporate environmental disclosure strategies: determinants, costs and benefits. Journal of Accounting, Auditing & Finance, 14(4), 429-451. https://doi.org/10.1177/0148558X9901400403
Cormier, D., & Magnan, M. (2007). The revisited contribution of environmental reporting to investors' valuation of a firm's earnings: An international perspective. Ecological economics, 62(3-4), 613-626. https://doi.org/10.1016/j.ecolecon.2006.07.030
Cormier, D. & Magnan, M. L. (2016). The advent of IFRS in Canada: incidence on value relevance. Journal of International Accounting Research, 15(3), 113-130. https://doi.org/10.2308/jiar-51404
Daugaard, D. (2020). Emerging new themes in environmental, social and governance investing: a systematic literature review. Accounting and Finance, 60(2), 1501–1530. https://doi.org/10.1111/acfi.12479
Deegan, C., Cooper, B. & Shelly, M. (2006). An Investigation of TBL report assurance statements: UK and European Evidence. Managerial Auditing Journal, 21(4), 329–371. https://doi.org/10.1108/02686900610661388
Degenhart, L., Mazzuco, M. S. A. & Klann, R. C. (2017). The relevance of accounting information and the corporate social responsibility of Brazilian companies. BASE - Revista de Administração e Contabilidade da Unisinos, 14(3), 157–168. https://doi.org/10.4013/base.2017.143.01
Dhaliwal, D. S., Li, O. Z., Tsang, A. & Yang, Y. G. (2011). Voluntary nonfinancial disclosure and the cost of equity capital: The initiation of corporate social responsibility reporting. The Accounting Review, 86(1), 59–100. https://doi.org/10.2308/accr.00000005
Du, S., Bhattacharya, C. B., & Sen, S. (2010). Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication. International journal of management reviews, 12(1), 8-19. https://doi.org/10.1111/j.1468-2370.2009.00276.x
Dunn, K. & Harness, D. (2018). Communicating corporate social responsibility in a social world: the effects of company-generated and user-generated social media content on CSR attributions and skepticism. Journal of Marketing Management, 34(17–18), 1503–1529. https://doi.org/10.1080/0267257X.2018.1536675
El Ghoul, S., Guedhami, O., Kwork, C. C. Y. & Mishra, D. R. (2011). Does corporate social responsibility affect the cost of capital? Journal of Banking and Finance, 35(9), 2388–2406. https://doi.org/10.1016/j.jbankfin.2011.02.007
Fazzini, M., & Dal Maso, L. (2016). The value relevance of “assured” environmental disclosure: The Italian experience. Sustainability Accounting, Management and Policy Journal. https://doi.org/10.1108/SAMPJ-10-2014-0060
Fraj-Andrés, E., López-Pérez, M. E., Melero-Polo, I. & Vázquez-Carrasco, R. (2012). Company image and corporate social responsibility: reflecting with SMEs’ managers. Marketing Intelligence & Planning, 30(2), 266-280. https://doi.org/10.1108/02634501211212019
Francis, J. & Schipper, K. (1999). Have financial statements lost their relevance? Journal of Accounting Research, 37(2), 319-352. https://doi.org/10.2307/2491412
Friede, G., Busch, T. & Bassen, A. (2015). ESG financial performance: aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210-233. https://doi.org/10.1080/20430795.2015.1118917'
Galati, A. Sakka, G., Crescimanno, M., Tulone, A. & Fiore, M. (2019). What is the role of social media in several overtones of CSR communication? The case of the wine industry in the Southern Italian regions. British Food Journal, 121(4), 856–873. https://doi.org/10.1108/BFJ-07-2018-0437
Gujarati, D. N. (2006). Econometria básica. 4. ed. Rio de Janeiro, Elsevier.
Hahn, R. & Kühnen, M. (2013). Determinants of sustainability reporting: A review of results, trends, theory, and opportunities in an expanding field of research. Journal of Cleaner Production, 59, 5–21. https://doi.org/10.1016/j.jclepro.2013.07.005
Hassel, L., Nilsson, H. & Nyquist, S. (2005). The value relevance of environmental performance. European Accounting Review, 14(1), 41–61. https://doi.org/10.1080/0963818042000279722
Khemir, S., Baccouche, C. & Ayadi, S. D. (2019). The influence of ESG information on investment allocation decisions: an experimental study in an emerging country. Journal of Applied Accounting, 20(4), 458-480. https://doi.org/10.1108/JAAR-12-2017-0141
Lee, D. D. & Faff, R. W. (2009). Corporate sustainability performance and idiosyncratic risk: A global perspective. Financial Review, 44(2), 213–237. https://doi.org/10.1111/j.1540-6288.2009.00216.x
Levy, H. & Lazarovich-Porat, E. (1995). Signaling theory and risk perception: An experimental study. Journal of Economics and Business, v. 47, n. 1, p. 39-56, 1995. https://doi.org/10.1016/0148-6195(94)00022-6
Luhmann, H. & Theuvsen, L. (2016). Corporate Social Responsibility in Agribusiness: Literature Review and Future Research Directions. Journal of Agricultural and Environmental Ethics, 29(4), 673–696. https://doi.org/10.1016/0148-6195(94)00022-6
Mavlanova, T., Benbunan-Fich, R. & Koufaris, M. (2012). Signaling theory and information asymmetry in online commerce. Information & Management, 49(5), 240-247. https://doi.org/10.1016/j.im.2012.05.004
Miralles-Quirós, M. M., Miralles-Quirós, J. L., & Valente Gonçalves, L. M. (2018). The value relevance of environmental, social, and governance performance: The Brazilian case. Sustainability, 10(3), 574. https://doi.org/10.3390/su10030574
Moskowitz, M. (1972). Choosing socially responsible stocks. Business and Society Review, 1, 71–75.
Ohlson, J. A. (1995). Earnings, book values, and dividends in equity valuation. Contemporary Accounting Research, 11(2), 661-687. https://doi.org/10.1111/j.1911-3846.1995.tb00461.x
Patel, S., Balic, A. & Bwakira, L. (2002). Measuring transparency and disclosure at firm-level in emerging markets. Emerging Markets Review, 3(4), 325–337. https://doi.org/10.1016/S1566-0141(02)00040-7
Peng, L. S. & Isa, M. (2020). Environmental, social and governance (Esg) practices and performance in shariah firms: Agency or stakeholder theory? Asian Academy of Management Journal of Accounting and Finance, 16(1), 1–34. https://doi.org/10.21315/aamjaf2020.16.1.1
Pereira, A. F. A., Stocker, F., Mascena, K. M. C. & Boaventura, J. M. G. (2020). Desempenho social e desempenho financeiro em empresas brasileiras: análise da influência do disclosure. Brazilian Business Review, 17(5), 540-558.
Salehi, M., Dashtbayaz, M. & Khorashadizadeh, S. (2018). Corporate social responsibility and future financial performance: Evidence from Tehran Stock Exchange. EuroMed Journal of Business, 13(3), 351–371. https://doi.org/10.1108/EMJB-11-2017-0044
Silva, A., Heinzen, C., Klann, R. C. & Lemes, S. (2018). Relação entre o Conservadorismo Contábil e a Relevância das Informações. Advances in Scientific and Applied Accounting, 11(3), 502-516. https://doi.org/10.14392/ASAA.2018110308
Simnett, R., Vanstraelen, A. & Chua, W. (2009). Assurance on sustainability reports: an international comparison. The Accounting Review, 84(3), 937–967. https://doi.org/10.2308/accr.2009.84.3.937
Soschinski, C. K., Giordani, M. S., Klann, R. C. & Brizolla, M. M. B. (2021). Influence of national culture on corporate social responsibility. Cross-Cultural Management Journal, 23(1).
Spence, M. (2002). Signaling in retrospect and the informational structure of markets. American Economic Review, 92(3), 434–459. https://doi.org/10.1257/00028280260136200
Stevenson, W. J. (2001). Estatística aplicada à administração. São Paulo: Harbra.
Stiglitz, J. E. (2002). Information and the change in the paradigm in economics. American Economic Review, 92, 460-501. https://doi.org/10.1257/00028280260136363
Taj, S. A. (2016). Application of signaling theory in management research: Addressing major gaps in theory. European Management Journal, 34(4), 338-348. https://doi.org/10.1016/j.emj.2016.02.001
Tench, R., Sun, W. & Jones, B. (2014). Introduction: CSR communication as an emerging field of study, in Tench, R., Sun, W. and Jones, B. (Eds), Communicating Corporate Social Responsibility: Perspectives and Practice (Critical Studies on Corporate Responsibility, Governance and Sustainability), 6, Emerald Group Publishing, Bingley, 3-21. https://doi.org/10.1108/S2043-9059(2014)0000006025
Throop, G. M., Starik, M., & Rands, G. P. (1993). Sustainable strategy in a greening world: Integrating the natural environment into strategic management. Advances in strategic management, 9, 63-92.
Velte, P. (207). Does ESG performance have an impact on financial performance? Evidence from Germany. Journal of Global Responsibility, 80(2), 169-178. https://doi.org/10.1108/JGR-11-2016-0029
Waddock, S. A. & Graves, S. B. (1997). The corporate social performance – financial performance link. Strategic Management Journal, 18(4), 303–319. https://doi.org/10.1002/(SICI)1097-0266(199704)18:4<303::AID-SMJ869>3.0.CO;2-G
Zhang, Q., Cao, M., Zhang, F., Liu, J. & Li, X. (2020). Effects of corporate social responsibility on customer satisfaction and organizational attractiveness: A signaling perspective. Business Ethics: A European Review, 29, 20-29. https://doi.org/10.1111/beer.12243
Downloads
Published
How to Cite
Issue
Section
License
Os Direitos Autorais para artigos publicados neste periódico são do autor, com direitos de primeira publicação para a Revista. Em virtude de aparecerem nesta Revista de acesso público, os artigos são de uso gratuito, com atribuições próprias, em aplicações educacionais, de exercício profissional e para gestão pública. A Revista adotou a licença Creative Commons Atribuição 4.0 Internacional - CC BY NC ND. Esta licença permite acessar, baixar (download), copiar, imprimir, compartilhar, reutilizar e distribuir os artigos desde que com a citação da fonte, atribuindo os devidos créditos de autoria. Nesses casos, nenhuma permissão é necessária por parte dos autores ou dos editores. Autores têm autorização para assumir contratos adicionais separadamente, para distribuição não-exclusiva da versão do trabalho publicada nesta revista (ex.: publicar em repositório institucional ou um capítulo de livro).
Esta obra está licenciada sob uma Licença Creative Commons.
