How bad is your company? Measuring corporate wrongdoing beyond the magic of ESG metrics

Do you want to know how bad your company behaved over the past 20 years? Now you can!

A new paper by Federica Nieri, Nicola Salvati, Davide Fiaschi and Elisa Giuliani just accepted for publication in Business Horizons 

“How bad is your company? Measuring corporate wrongdoing beyond the magic of ESG metrics”

Abstract: Most earlier attempts to measure corporate wrongdoing rely on data and indexes sold by Environmental, Social and Governance (ESG) data providers. Developed for investors and market players, ESG data have been widely used in the academia, but so far very little research has been conducted to assess and overcome their limitations. In this paper, we take a first step into this direction and propose to use an M-quantile regression approach to develop an index of corporate wrongdoing, understood as firms’ involvement in controversies over universal human rights. We apply our proposed methodology to a novel and unique hand-collected dataset of 380 large publicly-listed firms from both advanced and emerging economies, covering the period 2003-2012. We discuss the importance of these indexes for managers and practitioners.