Gillan, Hartzell, Koch, and Starks (2010)

Gillan, Stuart L., Jay C. Hartzell, Andrew Koch, and Laura T. Starks.  “Firms’ Environmental, Social, and Governance (ESG) Choices, Performance and Managerial Motivation.”  Working paper (Texas Tech University), November 19, 2010.

From the authors' abstract:  "We examine the extent to which a widely-used measure of firms’ ESG performance is related to firms’ operating performance, efficiency, compensation practices, trading by institutional investors, and ultimately, valuation.... We find that operating performance, efficiency, and firm value tend to increase with stronger ESG performance. We also find that CEOs who adopt stronger ESG policies receive lower unexplained salary compensation than their peers. Taken together, these results suggest that firms with stronger ESG policies also enjoy increased efficiency and higher valuations than their peers."