ESG Performance and Systemic Risk Nexus: Role of Firm-Specific Factors in Indian Companies

This study investigates the ESG performance–systemic risk (SR) nexus among Indian companies. Using the beta coefficient from the Capital Asset Pricing Model (CAPM) and statistical analysis, it explores how ESG performance affects SR. The findings reveal that firms with higher ESG scores have lower S...

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Bibliographic Details
Published in:Journal of risk and financial management 2024-09, Vol.17 (9), p.381
Main Authors: Gidage, Mithilesh, Bhide, Shilpa, Pahurkar, Rajesh, Kolte, Ashutosh
Format: Article
Language:English
Subjects:
Brand loyalty
Consumer behavior
Consumers
Economic growth
Environmental stewardship
Influence
Institutional investments
International finance
Investment analysis
Investors
Portfolio management
Stakeholders
Sustainability
Valuation
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Summary:This study investigates the ESG performance–systemic risk (SR) nexus among Indian companies. Using the beta coefficient from the Capital Asset Pricing Model (CAPM) and statistical analysis, it explores how ESG performance affects SR. The findings reveal that firms with higher ESG scores have lower SR sensitivity. Notably, there is a significant difference in risk sensitivity between high- and low-ESG-rated companies, with ESG effects being less pronounced in high-cap firms compared to low-cap firms. Conversely, large firms, older firms, and those with lower borrowing costs show a diminished effect of ESG ratings on their SR sensitivity. These results underscore the importance of firm-specific characteristics in determining the efficacy of ESG strategies in risk mitigation. This study reveals that ESG performance reduces SR, with market valuation affecting this relationship.
ISSN:1911-8074
1911-8066
1911-8074
DOI:10.3390/jrfm17090381