Is the corporate financial strategy in the oil and gas sector affected by ESG dimensions?
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Ramírez Orellana, Alicia; Martínez Victoria, María Del Carmen; García Amate, Antonio Jesús; Rojo Ramírez, Alfonso AndrésDate
2023Abstract
The oil and gas sector is under pressure because of its impact on sustainability. Company’s stakeholders are aware of the ethical behavior of those firms related to hazardous activities. Literature has analyzed the relationship between corporate social responsibility and different measures of efficiency (e.g., financial performance or market value) without a conclusive result. This research establishes an ESG index (environmental, social and governance) that allows a comprehensive measure of corporate social responsibility and its effects on corporate financial strategy. The study analyzes how the ESG index influences the value of oil and gas companies as well as their financial performance and financial risk. To do this, the PLS-SEM was applied to a sample of 219 oil and gas companies in different countries. Results show that the environmental and governance dimensions are the backbone of the ESG index that positively impact on all three.
Palabra/s clave
ESG
Financial performance
Market risk
Market value
Oil and gas