Dissertations, Theses, and Capstone Projects

Date of Degree

9-2020

Document Type

Dissertation

Degree Name

Ph.D.

Program

Business

Advisor

Lin Peng

Committee Members

Sonali Hazarika

Jun Wang

Ailsa Roell

Subject Categories

Corporate Finance | Finance and Financial Management | Portfolio and Security Analysis

Keywords

ESG Pay, ESG Compensation, Sustainability, Socially Responsible Investing

Abstract

The dissertation provides an extensive literature review of topics in Corporate Sustainability. It further examines two key topics: ESG Pay and ESG Investing. For ESG Pay, I examine Bloomberg’s ESG linked pay measure using the largest panel (to date). I confirm several important results from the nascent literature on ESG Pay. Firstly, I find that Country and Industry play a major role in determining ESG Pay adoption. Secondly, among firm characteristics, Big and Value firms tend to have a greater probability of adopting ESG Pay. Thirdly, higher ESG scores increase the chance of ESG Pay adoption in the subsequent year. Finally, ESG pay is positively associated with financial outcomes such as Tobin’s Q and Operating profit Margin. These results together support the case for ESG Pay as a potent corporate governance tool available to shareholders. Next, the dissertation examines ESG Investing using the setting of Mass shootings in USA. I analyze the behavior of Institutional Investors towards Gun stocks, following a mass shooting incident. Non-Socially Responsible Investors (Non-SRI) increase their holdings in Gun Stocks by about 29% following a mass shooting while SRI investors do not significantly change their holdings in gun stocks following a mass shooting. Similar results hold for a buy/sell dummy indicator. Non-SRI investors are less likely to sell Gun Stocks following a mass shooting, while the SRI investors are more likely to sell Gun Stocks following a mass shooting. These differences in behavior are driven primarily due to differences in social preferences.

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