Abstract

CORREA-GARCIA, Jaime Andrés  and  VASQUEZ-ARANGO, Lorena. Environmental, Social, and Governance Performance: Impact on Financial Performance in the Latin American Context. Rev.fac.cienc.econ. [online]. 2020, vol.28, n.2, pp.67-84.  Epub Dec 22, 2020. ISSN 0121-6805.  https://doi.org/10.18359/rfce.4271.

This article intends to study the relationship between environmental, social, and governance performance (ESG) and financial performance in companies in emerging Latin American economies based mainly on agency theory, resource-based theory, and stakeholder theory. For this, a sample of companies from the primary Latin American stock indices in 2013-2017 was taken using panel data analysis. The results suggest a positive relationship between esg variables and financial performance, implying companies' motivation to adopt good corporate social responsibility (CSR) practices since they are well rewarded financially. The environmental component suggests the potential for improvement by Latin American companies. This study also provides inputs to the study of esg performance in Latin America that are of interest to regulators, companies, scholars, and professionals for being a region of tremendous natural wealth that demands coordination of all agents to advance at the business level and as a society and achieve more balanced development between financial and non-financial factors.

Keywords : corporate social responsibility; esg performance; financial performance; value creation.

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