Capital providers’ effects on the ESG performance scores of European industrial firms: frequentist and Bayesian approaches
Purpose This study aims to explore the effects of external capital providers, particularly the largest shareholders and debtholders, on environmental, social and governance (ESG) performance scores and three European industrial companies’ ESG pillar scores. Design/methodology/approach The sample consists of 135 industrial services and goods companies that were members of the STOXX Europe 600 Index during the 2019–2023 period. This selection enables the exploration of the effects of external capital providers beyond the constraints of intense public scrutiny within the industry. The study uses regression-based analyses complemented by Bayesian approaches. Because the sample period begins after the adoption of the Sustainable Finance Disclosure Regulation and the European Green Deal, the results provide valuable insights for policymakers, regulators and minority shareholders. Findings The findings consistently show that ownership concentration negatively affects social and governance scores, whereas corporate ownership positively affects environmental performance, likely because of potential synergies. In addition, financial investors appear to respond more to ESG controversies than to actively shape the ESG efforts of portfolio companies. Finally, Bayesian analysis reveals a high probability of a positive debt–social score association. Originality/value While previous studies have primarily relied on frequentist methods to assess ESG determinants at the aggregate level, this study leverages Bayesian analyses to quantify the likelihood that the largest shareholders and debtholders affect ESG performance positively or negatively. Furthermore, it broadens the scope of ESG research by investigating the role of non-financial corporations as significant equity holders, a topic that has received limited attention.
Authors
- Florian Zechser (ORCID: https://orcid.org/0000-0001-7753-712X)
- Joachim Rojahn (ORCID: https://orcid.org/0000-0001-9869-268X)
Institutions
- FOM University of Applied Sciences for Economics and Management (DE)
Publication Details
- Journal
- Review of Accounting and Finance
- Published
- 2026-05-29
- DOI
- https://doi.org/10.1108/raf-12-2024-0560
- Primary Topic
- Corporate Social Responsibility Reporting
- Type
- article
- Field-Weighted Citation Impact
- 0.00