Work

ESG Performance and Dividend Payout: The Moderating Role of ESG Controversies and Legal Systems

Year: 2025

Type: article

Abstract: ABSTRACT This study delves into the relationship between ESG performance and dividend payout in G20 countries. Based on a comprehensive sample of 2344 firms from 2011 to 2022, our findings reveal a positive correlation between ESG performance and dividend payout. Notably, this positive impact is significantly pronounced in common‐law countries, where investor protection is robust. Moreover, companies with high ESG performance are more adept at increasing dividends despite ESG controversies. These results remain robust even when considering endogeneity concerns, reduced sample size, or the use of alternative proxies for dividends and ESG. Our study's findings have practical implications, as they suggest that companies can enhance their dividend payout by improving their ESG performance, even in the face of controversies. This contributes to the existing literature by shedding light on the relationship between non‐financial performance and a key corporate financial decision (dividends) in a cross‐country context.

Source: Business Strategy and the Environment

DOI: 10.1002/bse.4355

Authors: Satish Kumar, Avinash Ghalke

Institutions: ICFAI Foundation for Higher Education, S.P. Jain Institute of Management and Research

Language: English

Topic: Corporate Social Responsibility Reporting

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: bronze

OpenAlex ID: W4410452271

FWCI: 9.843

Cites: 56

Cited by: 11

Related to: 10