ESG actions, corporate discourse, and market assessment nexus: evidence from the oil and gas sector
Abstract
This paper focuses on the oil and gas sector because of its direct exposure to the complete range of ESG challenges, as well as strong pressure to change business models due to the energy transition. We investigate the ESG scores of a sample of global companies in this sector and their relationship to stock market performance and to the ESG intensity of corporate reports. As an original contribution, we incorporate the intensity of corporate discourse on technology-related sustainability topics for the first time in the literature. Our findings reveal that investors examine both sustainability discourse and results when determining a company’s value and validate the role of ESG scores and rankings in providing investors with an accurate and meaningful assessment of companies’ sustainability actions. Moreover, companies’ disclosure of their sustainable actions and technological developments related to sustainability is positively related to stock returns. This implies that a focus on sustainable practices and constant communication with investors might result in higher market performance. Furthermore, encouraging companies, particularly those in sectors and industries sensitive to ESG factors, to invest in ESG initiatives, is accompanied by improved performance, which makes them more attractive and better positioned to attract financing.
Keyword : ESG scores, corporate discourse, sustainability, technology, corporate performance, stock returns, panel modelling
How to Cite
Horobet, A., Bulai, V., Radulescu, M., Belascu, L., & Dumitrescu, D. G. (2024). ESG actions, corporate discourse, and market assessment nexus: evidence from the oil and gas sector. Journal of Business Economics and Management, 25(1), 153–174. https://doi.org/10.3846/jbem.2024.21070
This work is licensed under a Creative Commons Attribution 4.0 International License.
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Hansen, L. P., Heaton, J., & Yaron, A. (1996). Finite-sample properties of some alternative GMM estimators. Journal of Business & Economic Statistics, 14(3), 262–280. https://doi.org/10.2307/1392442
Hausman, J. A. (1978). Specification tests in econometrics. Econometrica, 46(6), 1251–1271. https://doi.org/10.2307/1913827
Henry, E., Jiang, X., Rozario, A. (2021). The evolution of environmental discourse: Evidence from conference calls. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3863354
Huang, D. Z. (2021). Environmental, social and governance (ESG) activity and firm performance: A review and consolidation. Accounting & Finance, 61(1), 335–360. https://doi.org/10.1111/acfi.12569
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Kamal, Y., & Deegan, C. (2013). Corporate social and environment-related governance disclosure practices in the textile and garment industry: Evidence from a developing country. Australian Accounting Review, 23(2), 117–134. https://doi.org/10.1111/j.1835-2561.2012.00205.x
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