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Purpose This study aims to investigate how firm value (FVA) affects Environment, Social and Governance controversies (ESGC), testing whether strong Environmental, Social and Governance practices (ESGP) and greater gender diversity on corporate boards (BGED) mitigates negative market reactions. Design/methodology/approach Using a quantitative research approach, this study conducts panel data regressions on a sample of 3,584 observations from companies listed in the STOXX 600 index over the period spanning from 2015 to 2023. Findings The results demonstrate a significant negative association between ESGC and FVA. However, this relationship is mitigated by greater BGED and strong ESGP, which enhance firms’ resilience to reputational risks. Originality/value These findings are likely to be of interest to scholars, corporate leaders and regulatory bodies seeking to explore how ESGC, FVA, ESG-driven initiatives and internal governance interact to shape sustainable business practices and mitigate reputational risks.
Kchaou et al. (Fri,) studied this question.