Exploring Financial Health in India: Evaluating Risks for Sustainable Practices
DOI:
https://doi.org/10.36676/irt.v9.i4.1464Keywords:
ESG Risk, Financial companies, Banking, Banks performanceAbstract
Stakeholder theory is the foundation for environmental, social, and governance (ESG) factors, which are crucial for sustainable corporate operations. This study looks at the effects that various ESG risk levels have on Indian financial companies' financial performance. The Prowess IQ database provided the data for this investigation. The study found, in keeping with stakeholder theory, a substantial negative association between ESG risk and a company's return on equity and return on assets through the use of correlation analysis and linear regression. These results emphasise how crucial it is for businesses to concentrate on lowering ESG risks in order to increase profitability. This study fills a knowledge gap about the relationship between ESG characteristics and financial performance, particularly in the context of the Indian financial sector, due to the paucity of research in this field.
References
Alberici, A. and Querci, F. (2016), “The quality of disclosures on environmental policy: The profile of financial intermediaries”, Corporate Social Responsibility and Environmental Management, Wiley Online Library, Vol. 23 No. 5, pp. 283–296.
Becchetti, L., Ciciretti, R., Hasan, I. and Kobeissi, N. (2012), “Corporate social responsibility and shareholder’s value”, Journal of Business Research, Elsevier, Vol. 65 No. 11, pp. 1628–1635.
Brown, D.L., Guidry, R.P. and Patten, D.M. (2009), “Sustainability reporting and perceptions of corporate reputation: An analysis using fortune”, Sustainability, Environmental Performance and Disclosures, Emerald Group Publishing Limited.
Brown, L.D. and Caylor, M.L. (2006), “Corporate governance and firm valuation”, Journal of Accounting and Public Policy, Elsevier, Vol. 25 No. 4, pp. 409–434.
Brown, L.D. and Caylor, M.L. (2009), “Corporate governance and firm operating performance”, Review of Quantitative Finance and Accounting, Springer, Vol. 32 No. 2, pp. 129–144.
Chih, H.-L., Chih, H.-H. and Chen, T.-Y. (2010), “On the determinants of corporate social responsibility: International evidence on the financial industry”, Journal of Business Ethics, Springer, Vol. 93 No. 1, pp. 115–135.
Dah, M.A. and Jizi, M.I. (2018), “Board independence and the efficacy of social reporting”, Journal of International Accounting Research, American Accounting Association, Vol. 17 No. 1, pp. 25–45.
Darnall, N. and Carmin, J. (2005), “Greener and cleaner? The signaling accuracy of US voluntary environmental programs”, Policy Sciences, Springer, Vol. 38 No. 2, pp. 71–90.
Eccles, R.G., Ioannou, I. and Serafeim, G. (2014), “The impact of corporate sustainability on organizational processes and performance”, Management Science, Informs, Vol. 60 No. 11, pp. 2835–2857.
Eccles, R.G. and Saltzman, D. (2011), “Achieving sustainability through integrated reporting”, Stanford Social Innovation Review, Leland Stanford Jr. University Stanford, CA, USA, Vol. 9 No. 3, pp. 56–61.
Famiyeh, S. (2017), “Corporate social responsibility and firm’s performance: empirical evidence”, Social Responsibility Journal, Emerald Publishing Limited.
Friede, G., Busch, T. and Bassen, A. (2015), “ESG and financial performance: aggregated evidence from more than 2000 empirical studies”, Journal of Sustainable Finance and Investment, Vol. 5 No. 4, pp. 210–233.
Friedman, A.L. and Miles, S. (2002), “Developing stakeholder theory”, Journal of Management Studies, Wiley Online Library, Vol. 39 No. 1, pp. 1–21.
Ghoul, S. El, Guedhami, O. and Kim, Y. (2017), “Country-level institutions, firm value, and the role of corporate social responsibility initiatives”, Journal of International Business Studies, Springer, Vol. 48 No. 3, pp. 360–385.
Godfrey, P.C. (2005), “The relationship between corporate philanthropy and shareholder wealth: A risk management perspective”, Academy of Management Review, Academy of Management Briarcliff Manor, NY 10510, Vol. 30 No. 4, pp. 777–798.
Goel, A.M. and Thakor, A. V. (2008), “Overconfidence, CEO selection, and corporate governance”, The Journal of Finance, Wiley Online Library, Vol. 63 No. 6, pp. 2737–2784.
Jensen, J.C. and Berg, N. (2012), “Determinants of traditional sustainability reporting versus integrated reporting. An institutionalist approach”, Business Strategy and the Environment, Wiley Online Library, Vol. 21 No. 5, pp. 299–316.
Khattak, M.A. (2021), “Corporate Sustainability and Financial Performance of Banks in Muslim Economies: The Role of Institutions”, Journal of Public Affairs, Vol. 21 No. 1, available at:https://doi.org/10.1002/pa.2156.
Krzus, M.P. (2011), “Integrated reporting: if not now, when”, Zeitschrift Für Internationale Rechnungslegung, Vol. 6 No. 6, pp. 271–276.
Lee, M.-T. (2016), “Corporate social responsibility and stock price crash risk: Evidence from an Asian emerging market”, Managerial Finance, Emerald Group Publishing Limited.
Porter, M.E. and Kramer, M.R. (2011), “The Big Idea: Creating Shared Value. How to reinvent capitalism—and unleash a wave of innovation and growth”, Harvard Business Review, Cambridge, Vol. 89 No. 1–2.
Scholtens, B. (2009), “Corporate social responsibility in the international banking industry”, Journal of Business Ethics, Springer, Vol. 86 No. 2, pp. 159–175.
Steyn, M. (2014), “Organisational benefits and implementation challenges of mandatory integrated reporting: Perspectives of senior executives at South African listed companies”, Sustainability Accounting, Management and Policy Journal, Emerald Group Publishing Limited.
Wang, Q., Dou, J. and Jia, S. (2016), “A meta-analytic review of corporate social responsibility and corporate financial performance: The moderating effect of contextual factors”, Business & Society, SAGE Publications Sage CA: Los Angeles, CA, Vol. 55 No. 8, pp. 1083–1121.
Zhu, Y., Sun, L.-Y. and Leung, A.S.M. (2014), “Corporate social responsibility, firm reputation, and firm performance: The role of ethical leadership”, Asia Pacific Journal of Management, Springer, Vol. 31 No. 4, pp. 925–947.
Prakash, M., & Pabitha, P. (2020). A hybrid node classification mechanism for influential node prediction in Social Networks. Intelligent Data Analysis, 24(4), 847-871
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Innovative Research Thoughts
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
