The Environmental, Social, and Governance Impact on Performance Stock Prices

Abstract

Following the global financial crisis, commercial banks intensified their social responsibility efforts in order to strengthen their stakeholders' reputation and trust in them. However, past research on the value relevance of these sustainable practices for their financial stakeholders is limited. The goal of this study is to investigate if the environmental, social, and governance (ESG) performance of commercial banks listed on different stock exchanges from GCC offers useful information and has a substantial influence on stock prices from 2008 to 2022. The findings show that stock market investors perceive the three ESG pillars differently. The authors also find that the value significance of ESG performance is much greater for banks from common law nations and during the global financial crisis. These findings may have ramifications for both internal and external stakeholders, including managers, investors, and market regulators.