The correlation between financial and non-financial performance referred to a sample of banks listed on European stock exchanges

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Abstract

In recent decades, corporate social responsibility (CSR) has become increasingly important in the economic and financial context, attracting increasing interest from companies, investors and society. Adopting sustainable practices, which consider environmental, social, and governance (ESG) issues, has become a priority for all organisations that recognise the importance of integrating non-financial aspects into their business model and strategy. This study examines the impact of non-financial performance, represented by ESG, on economic and financial performance in the European banking sector, which was one of the first to introduce CSR. There are several similar studies in the literature, but they are mainly limited to examining the relationship between a single ESG dimension and the financial and economic performance of companies. This study aims to expand the variables of the analysis. To this end, the study investigates the relationship between non-financial information, represented by the environment, human capital, business model and innovation, and financial information identified by the market price of shares, return on assets (ROA), return on equity (ROE), price/earnings (P/E) and book value per share (BVPS). The proposed analysis refers to a sample of companies listed on stock exchanges in the European Union (EU), for which the impact of ESG factors on financial performance is studied using a logit regression model.

Keywords: Corporate Social Performance, ESG, Corporate Financial Performance, Banking System

Authors’ individual contribution: Conceptualization — R.P. and P.S.; Methodology — R.P. and P.S.; Investigation — R.P. and P.S.; Resources — R.P. and P.S.; Writing — Original Draft — R.P. and P.S.; Writing — Review & Editing — R.P. and P.S.; Supervision — R.P. and P.S.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: E5, G21, L1

Received: 20.08.2024
Accepted: 20.12.2024
Published online: 25.12.2024

How to cite this paper: Provasi, R., & Saracino, P. (2024). The correlation between financial and non-financial performance referred to a sample of banks listed on European stock exchanges. Corporate Ownership & Control, 21(4), 106–116. https://doi.org/10.22495/cocv21i4art9