Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
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An Empirical Analysis on Performance Inconsistency among Environmental, Social and Governance Components of ESG Ratings

  • Minjung Park (Department of Economics, Ewha Womans University)
  • Received : 2024.02.29
  • Accepted : 2024.03.24
  • Published : 2024.03.31
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Abstract

Purpose - The purpose of this study is to empirically investigate the degree of performance inconsistency among the Environmental, Social and Governance ratings. Design/methodology/approach - This study performs regression analysis using the widely used ESG ratings published by the Korea Institute of Corporate Governance and Sustainability. Findings - The results show that firms often do not show consistent performance across the Environmental, Social and Governance aspects, with excellent performance on one aspect but mediocre or poor performance on another. The paper also finds some degree of firm-level persistence in such performance inconsistency, suggesting that the traits of the firm and the industry the firm belongs to might influence whether a firm shows inconsistent performance across the three aspects. Research implications or Originality - This paper highlights the need for researchers and practitioners to understand the underlying behavior of the individual E, S and G ratings, instead of taking them as given, in order to properly design their analyses.

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Acknowledgement

This work was supported by the National Research Foundation of Korea (NRF) grant funded by the Ministry of Science and ICT (MSIT) (No. RS-2023-00217228).

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