ESG CONTRACTING: GREED OR GREEN? A GLOBAL STUDY OF OWNERSHIP INFLUENCE AND VALUE CREATION IN REGARD TO ESG CONTRACTING

Sammanfattning: This study investigates institutional and activist ownership pressure for implementing ESG contracting, and the potential value creation that follows in terms of financial and ESG performance. Using data from 11,521 publicly listed firms worldwide in the period 2007-2022, this longitudinal study employs a multivariate regression model in order to understand whether certain shareholders push for ESG contracting, and whether ESG contracting mitigates or reinforces agency costs. Our regression model shows a positive relationship between institutional owners and the implementation of ESG contracting, meanwhile a non-significant, indicatively negative relationship between activist owners and the implementation is found. Furthermore, our results show that the inclusion of ESG metrics in compensation schemes leads to better ESG and financial performance over time. This implies that implementing ESG contracting is value enhancing both for investing and non-investing stakeholders. This study fills an important research gap by examining the ownership influences on, and impact of, corporate governance connected to ESG in a global context up to date.