The impact of environmental, social and governance (ESG) performance on the duration of dividend sustainability: a survival analysis

Abstract

Purpose

This study investigates the impact of ESG performance on the duration of dividend sustainability, introducing survival analysis as a novel methodological approach in this context and highlighting its differences from commonly used regression analyses such as OLS and logistic regression.

Design/methodology/approach

Survival analysis methods, including Kaplan–Meier estimates and Cox proportional hazards time-dependent regression, were employed to examine data from publicly listed companies in Taiwan between 2016 and 2023. Additionally, logistic regression was tested to compare results with those from the survival analysis.

Findings

While overall ESG performance did not show a significant impact on the duration of dividend sustainability, a detailed analysis of the individual ESG components revealed that the environmental performance component can extend the duration of dividend sustainability.

Research limitations/implications

The findings based on companies in Taiwan may not generalize to other contexts. However, this study primarily highlights the application of survival analysis in ESG-related literature. Future research could explore similar analyses in different international settings to better understand the broader applicability of these results.

Practical implications

The results suggest that the impact of ESG performance on dividend amounts and the duration of dividend sustainability are distinct issues. Investors and stakeholders should consider these differences when assessing corporate performance and making investment decisions.

Social implications

The study highlights the importance of environmental sustainability in corporate dividend policies, indicating that companies with better environmental performance provide more stable returns.

Originality/value

This study introduces survival analysis to the study of ESG performance and the duration of dividend sustainability, addressing a gap in the literature by focusing on the duration of dividends rather than their amount.

Citation

Liu, Y.-Y. and Lee, P.-S. (2024), "The impact of environmental, social and governance (ESG) performance on the duration of dividend sustainability: a survival analysis", Managerial Finance, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MF-06-2024-0462