Tobin’s Q and ESG Score in the Banking Industry: Are There Differences Among Banks?


Tobin’s Q and ESG Score in the Banking Industry: Are There Differences Among Banks?


Objectives. In recent years, and especially after the global financial crisis, sustainability has attracted increasing attention from regulators, investors, firms, academics, and, in general, stakeholders. This interest has created opportunities and challenges for firms in their risk-return relationship with shareholders and, in general, stakeholders (Ng and Zabihollah, 2015), pushing them to pursue coherence between corporate financial performance and corporate social performance (Crespi and Magliavacca, 2020).

Financial intermediaries are increasing their attention on socially responsible aspects in order to reinforce their credibility and reputation among stakeholders (Coulson, 2009), considering a three-dimensional financial logic (risk, return, and social impact) in order to enhance their long-term value by fulfilling their social responsibilities (Freeman, 1984; Amini and Bienstock, 2014; Ng and Zabihollah, 2015; Ziolo et al., 2019).

In this context, a critical characteristic of a successful sustainable business model is the explicit recognition of the importance of acknowledging multiple perspectives in defining and creating value, with a pluralistic and iterative process (Wheeler et al., 2003).

The growth of banks’ sustainable practices is also strongly driven by legislation, with the adoption of regulatory provisions at both global (Global Reporting Initiative, United Nations Global Compact, Equator Principles) and European levels (Directive 78/669/EEC, Directive 83/349/EEC, EBA’s Guideline, European Regulation 2019/2088).

Moreover, economical, legal and self-regulated aspects have influenced the financial firm behavior in acting in a more socially responsible way, in order to enhance its competitive advantage in high market competitiveness contexts and to attract socially responsible investors (Chih et al., 2010; Oliveira et al., 2019).

At the same time, these issues have become a new theme for academics in the field of management, and a number of contributions covering various issues and aspects have been published.

#Banking Industry #ESG #Shareholders value creation #Sustainability #Tobin’s Q