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THIS DOI METADATA WAS LAST UPDATED: 2025-01-13 16:02
Cite as
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Full Title
FINANCIAL REPORTING
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Publisher
FrancoAngeli
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ISSN
2036-671X (Printed Journal)
2036-6779 (Online Journal)
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Journal Issue Number
2
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Journal Issue Designation
2
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Journal Issue Date
2024
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Full Title
Revisiting the impact of ESG on financial performance: Empirical evidence from the Italian Stock Exchange
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By (author)
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First Page
163
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Last Page
191
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Language of text
English
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Publication Date
2024/12
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Copyright
2024 FrancoAngeli srl
Main description
Purpose: This paper re-examines the overall and pillar-level impact of the envi-ronmental, social, and governance (ESG) performance on the financial perfor-mance of companies listed in the Italian Stock Exchange market. By using the seminal paper by Velte (2017) – which focused on the German context – as the base comparison, we also test the moderating role of a firm's characteristics on that association. Design/methodology/approach: We analyze data on companies listed in the Ital-ian Stock Exchange from 2010 to 2022, sourced from the Refinitiv Eikon plat-form, for a total of 650 firm-year observations. Correlation and regression anal-yses are conducted to evaluate the link between ESG and a series of financial per-formance indicators including the return on assets (ROA) and Tobin's Q ratios. Findings: While neutral results are found for ROA, this study reveals that ESG per-formance has a positive impact on Tobin's Q, in contrast to what was found by Velte (2017). However, we confirm that the governance pillar exerts the most sig-nificant effect on Tobin's Q. Furthermore, the analysis of the firms' characteristics as moderating factors reveals that the risk and financial leverage of a company negatively influence the relationship between ESG performance and financial per-formance. Originality/value: This study contributes to the empirical literature on the associ-ation between ESG performance and financial performance by re-examining the study by Velte (2017) for a different period and different context. Moreover, we test for the moderating effect of the firms' characteristics on the relationship be-tween ESG and financial performance.
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