Search results

This article aims to analyse the relationship between the environmental, social and governance (ESG) score and the cost of capital of 600 large, mid and small capitalization companies across 17 countries that are component of the EURO STOXX 600 Index. By examining whether ESG has an impact on the cost of capital, this article contributes to the solutions to improve the impact of organizations and societies on sustainable development. The article further examines whether the effect is because of the environmental, social and/or governance components. In addition, the article analyses which WACC component (i.e. the cost of equity, the cost of debt, the beta or the leverage ratio) is affected. Furthermore, this article analyses whether a high ESG score can substitute for a weaker legal environment.

The results were obtained by using ordinary least squares panel data modelling to analyse the relationship between the ESG score and the cost of capital. The sample consists of companies that are part of the STOXX Europe 600 Index over the period 2018–2021, which is composed of 600 companies, including large, mid and small capitalization firms listed across 17 countries. The sample finally includes 1,960 firm-year observations.

Companies with a higher ESG score tend to have a lower cost of capital, but this relationship holds only for firms domiciled in countries with a weaker legal environment. In addition, these firms should not only increase their ESG score to create a more sustainable environment but also to reduce their cost of debt. Environmental and social factors have a significantly negative impact on the cost of capital only in countries with a weaker legal environment, while the governance component positively impacts the cost of capital by allowing firms to borrow more.

There is not yet a standardized taxonomy to define ESG, making the study dependent on commercial data providers.

The new insights can be used by companies domiciled in countries with weaker legal environments to reduce their cost of capital. The results also allow us to know on which components of the ESG score to focus. It can also help policymakers, specifically those in countries with a weaker legal environment, to provide incentives to further stimulate ESG investments and disclosure, thereby contributing to a more sustainable society.

To achieve the sustainable development goals put forward by the United Nations, it is important for firms to invest in ESG projects. It is nevertheless insightful to know whether these ESG investments, which are currently observed as a cost, also provide benefits to firms and in which countries. If firms clearly see the advantages of investing in ESG projects, they are likely to proactively engage in them.

This article is the first, to the best of the authors’ knowledge, to focus on 17 European countries, thereby capturing divergent legal environments. This setting allows us to answer the main novel research question, namely, whether the ESG score can act as a substitute for the legal environment in which the company is domiciled. The article also goes further than previous articles by examining whether the effect is because of the environmental, social and/or governance component and whether these impact the components of the weighted cost of capital, namely, the cost of equity, the cost of debt, the beta or the leverage ratio of the companies.

The purpose of this paper is to link public relations to peacebuilding. Although scholarship has discussed public relations as relationship management, the nexus between public relations and peace building has been understudied. To address this deficiency, this research studies the negotiations between the Government of Colombia and the FARC-EP separatist group that lead to the landmark peace treaty between the two entities that had fought for over five decades with thousands of deaths. Three research questions addressed the communication factors that contributed to the two sworn enemies – FARC-EP and the Colombian Government – finally sealing a peace agreement; the specific public relations strategies and techniques that led to relationship building between the two sides leading to the landmark peace agreement; and the use of the indicators of relationship building proposed by scholarship in the negotiations between the Colombian Government and FARC-EP.

The case study method was used and a purposive sample of news reports from three national newspapers at specific key dates yielding a final sample consisted of 504 articles was analysed. A codebook with deductive and inductive categories was developed specially to study the existing communication factors (RQ1), public relations strategies and techniques (RQ2), as well as contributions by relationship indicators (RQ3). Given the sensitivity of the issues, only secondary data could be relied upon for this study.

The results of RQ1 fall within the scope of Grunig’s (2001), Sriramesh’s (1992) and Hung’s (2001) notion of the personal influence model where the leveraging of individuals’ network is important to facilitate communication. Indeed, the relations already existing and established with third parties are revealed to be fundamental to the success of the negotiation process. As for RQ2, findings demonstrate that the Colombian Government used third-party mediation, principled and distributive strategies, while FARC-EP mainly used contending strategies. But results showed that both used compromising during the whole process, and that both transitioned from one-way asymmetrical strategies, such as principled or contending towards compromising along the peace talks. Finally, findings demonstrate evidence of the four indicators of the relationship and their link with public relations techniques. The most evidenced indicators of the relationship were trust, commitment and control mutuality. Trust was the indicator of the relationship the most evidenced in the Colombian case. The dimension was built during the whole process and evolved continually. Distrust was the total between the two enemies at the beginning of the pre-negotiation. However, as parties entered into a relationship, confidence and trust increased.

The inability to obtain primary data is the major limitation of this study. It was caused by the sensitivity of the topic.

This study links public relations to a very practical case that is also vastly understudied/underreported – peacemaking/peacebuilding – while also addressing communication by governments and civil society in Latin America – an area that is largely understudied.

This is the first study that links public relations with peacebuilding.