ESG and Financial Distress: The Role of Bribery, Corruption, and Fraud in FTSE All-Share Companies
Our investigation examined the impact of ESG (Environmental, Social, and Governance) activities on corporate financial distress. This research utilised data from companies listed in the FTSE All-Share index from 2014 to 2022 from the Refinitiv EIKON database. We incorporated year- and industry-fixed...
Saved in:
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
MDPI AG
2025-02-01
|
| Series: | Risks |
| Subjects: | |
| Online Access: | https://www.mdpi.com/2227-9091/13/3/41 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1849340064165789696 |
|---|---|
| author | Probowo Erawan Sastroredjo Tarsisius Renald Suganda |
| author_facet | Probowo Erawan Sastroredjo Tarsisius Renald Suganda |
| author_sort | Probowo Erawan Sastroredjo |
| collection | DOAJ |
| description | Our investigation examined the impact of ESG (Environmental, Social, and Governance) activities on corporate financial distress. This research utilised data from companies listed in the FTSE All-Share index from 2014 to 2022 from the Refinitiv EIKON database. We incorporated year- and industry-fixed effects into our analysis to address changing economic conditions and industry-specific effects. ESG scores were used as a proxy for ESG activities, while Z-scores were utilised to gauge financial distress. The results unveiled a compelling trend: ESG activities showcased a negative correlation with financial distress, implying that companies actively involved in ESG actions are less likely to face default, even after incorporating several robustness and endogeneity tests. Moreover, when examining the role of bribery, corruption, and fraud issues (negative issues) as a moderating factor, our findings revealed that lower negative issues strengthen the negative relationship between ESG (governance pillar) and financial distress. This suggests that governance mechanisms effectively reduce financial distress in less corrupt environments, where institutional quality supports properly implementing governance practices. These findings offer valuable insights for companies seeking to mitigate financial distress by adopting ESG strategies. |
| format | Article |
| id | doaj-art-1e26028a2f2b4205ae702ace322d0635 |
| institution | Kabale University |
| issn | 2227-9091 |
| language | English |
| publishDate | 2025-02-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Risks |
| spelling | doaj-art-1e26028a2f2b4205ae702ace322d06352025-08-20T03:44:00ZengMDPI AGRisks2227-90912025-02-011334110.3390/risks13030041ESG and Financial Distress: The Role of Bribery, Corruption, and Fraud in FTSE All-Share CompaniesProbowo Erawan Sastroredjo0Tarsisius Renald Suganda1School of Business, University of Leicester, Leicester LE2 1RQ, UKFaculty of Economics and Business, Ma Chung University, Malang 65151, IndonesiaOur investigation examined the impact of ESG (Environmental, Social, and Governance) activities on corporate financial distress. This research utilised data from companies listed in the FTSE All-Share index from 2014 to 2022 from the Refinitiv EIKON database. We incorporated year- and industry-fixed effects into our analysis to address changing economic conditions and industry-specific effects. ESG scores were used as a proxy for ESG activities, while Z-scores were utilised to gauge financial distress. The results unveiled a compelling trend: ESG activities showcased a negative correlation with financial distress, implying that companies actively involved in ESG actions are less likely to face default, even after incorporating several robustness and endogeneity tests. Moreover, when examining the role of bribery, corruption, and fraud issues (negative issues) as a moderating factor, our findings revealed that lower negative issues strengthen the negative relationship between ESG (governance pillar) and financial distress. This suggests that governance mechanisms effectively reduce financial distress in less corrupt environments, where institutional quality supports properly implementing governance practices. These findings offer valuable insights for companies seeking to mitigate financial distress by adopting ESG strategies.https://www.mdpi.com/2227-9091/13/3/41ESGfinancial distressFTSE all-shareZ-scoreRefinitiv EIKON |
| spellingShingle | Probowo Erawan Sastroredjo Tarsisius Renald Suganda ESG and Financial Distress: The Role of Bribery, Corruption, and Fraud in FTSE All-Share Companies Risks ESG financial distress FTSE all-share Z-score Refinitiv EIKON |
| title | ESG and Financial Distress: The Role of Bribery, Corruption, and Fraud in FTSE All-Share Companies |
| title_full | ESG and Financial Distress: The Role of Bribery, Corruption, and Fraud in FTSE All-Share Companies |
| title_fullStr | ESG and Financial Distress: The Role of Bribery, Corruption, and Fraud in FTSE All-Share Companies |
| title_full_unstemmed | ESG and Financial Distress: The Role of Bribery, Corruption, and Fraud in FTSE All-Share Companies |
| title_short | ESG and Financial Distress: The Role of Bribery, Corruption, and Fraud in FTSE All-Share Companies |
| title_sort | esg and financial distress the role of bribery corruption and fraud in ftse all share companies |
| topic | ESG financial distress FTSE all-share Z-score Refinitiv EIKON |
| url | https://www.mdpi.com/2227-9091/13/3/41 |
| work_keys_str_mv | AT probowoerawansastroredjo esgandfinancialdistresstheroleofbriberycorruptionandfraudinftseallsharecompanies AT tarsisiusrenaldsuganda esgandfinancialdistresstheroleofbriberycorruptionandfraudinftseallsharecompanies |