What is it about?

This study explores the relationship between environmental, social, and governance (ESG) reputational risk and investment efficiency.

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Why is it important?

This research provides evidence that ESG reputational risk relates to higher corporate suboptimal investment (underinvestment) and a lower speed of adjustment back to the optimal investment level.


This study carries significant importance as it delves into the intersection of ESG reputational risk and investment efficiency, unveiling how these factors intertwine in the corporate landscape. By showcasing the link between ESG reputation and suboptimal investment, it sheds light on the broader impact of environmental, social, and governance considerations on corporate decision-making. Understanding how ESG reputational risk influences underinvestment and the sluggish adjustment back to optimal levels is pivotal for investors, policymakers, and corporate leaders. These insights underscore the imperative for integrating ESG considerations into investment strategies, emphasizing the need to mitigate reputational risks to foster more efficient and sustainable corporate practices.

Dr. Dimitrios Konstantios
Alba Graduate Business School, The American College of Greece

Read the Original

This page is a summary of: Does ESG reputational risk affect the efficiency and speed of adjustment of corporate investment?, European Financial Management, November 2023, Wiley,
DOI: 10.1111/eufm.12470.
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