Table 4. Baseline regression: firm-level...

Table 4.

Baseline regression: firm-level political risk and ESG controversies

	(1)	(2)	(3)	(4)
Variable	ESGC	ESGC	ESGC	ESGC
PRisk	1.0029***	0.9809***	0.3494**	0.3364**
	(3.1806)	(3.1289)	(2.0688)	(2.1535)
MTB	−2.0341***	−2.0186***	−0.6843***	−0.6728***
	(−11.5790)	(−11.4953)	(−2.7674)	(−2.6712)
LEV	−3.6893*	−3.4949	−2.2150	−1.7633
	(−1.6997)	(−1.6031)	(−1.1862)	(−0.9016)
RD	6.8204	6.7251	−5.2939	−5.7323
	(1.4656)	(1.4456)	(−0.6008)	(−0.6217)
ROA	−16.8370***	−16.9759***	−9.3566***	−9.7342***
	(−6.8481)	(−6.9188)	(−3.4283)	(−3.5342)
CAPX	0.2794**	0.2810**	−0.0036	−0.0046
	(2.1821)	(2.1938)	(−0.0275)	(−0.0362)
SIZE	6.7959***	6.7822***	−0.3073	−0.1456
	(13.5241)	(13.4710)	(−0.5404)	(−0.2361)
CashVOLT	15.9788***	15.8884***	−4.4325	−4.5860
	(4.8694)	(4.8430)	(−0.7630)	(−0.7885)
StockVOLT	0.0119	0.0113	0.0348	0.0336
	(1.1943)	(1.1129)	(1.2602)	(1.2372)
BSIZE	3.0631*	2.8974*	3.0152	2.9999*
	(1.8299)	(1.7222)	(1.6232)	(1.7288)
GDP		−0.1053		0.0642
		(−0.4271)		(0.2416)
INF		0.5312*		0.6841**
		(1.8415)		(2.2034)
UNEMP		0.5432		0.6326*
		(1.4874)		(1.7290)
CoC		−1.8840		3.7402
		(−0.5126)		(1.0943)
GOVEF		8.6883*		7.5977
		(1.8193)		(1.1836)
REGQ		1.1594		2.2330
		(0.3661)		(0.7149)
EPU		−2.7641*		−3.3738**
		(−1.7049)		(−2.0539)
Constant	−98.4451***	−100.0873***	11.6182	1.1135
	(−15.4100)	(−7.5863)	(1.0741)	(0.0570)
Year effects	Yes	Yes	Yes	Yes
Firm effects	No	No	Yes	Yes
Country effects	Yes	Yes	Yes	Yes
Industry effects	Yes	Yes	Yes	Yes
Observations	12,517	12,517	12,517	12,517
Adj R²	0.235	0.236	0.403	0.404

	(1)	(2)	(3)	(4)
Variable	ESGC	ESGC	ESGC	ESGC
PRisk	1.0029***	0.9809***	0.3494**	0.3364**
	(3.1806)	(3.1289)	(2.0688)	(2.1535)
MTB	−2.0341***	−2.0186***	−0.6843***	−0.6728***
	(−11.5790)	(−11.4953)	(−2.7674)	(−2.6712)
LEV	−3.6893*	−3.4949	−2.2150	−1.7633
	(−1.6997)	(−1.6031)	(−1.1862)	(−0.9016)
RD	6.8204	6.7251	−5.2939	−5.7323
	(1.4656)	(1.4456)	(−0.6008)	(−0.6217)
ROA	−16.8370***	−16.9759***	−9.3566***	−9.7342***
	(−6.8481)	(−6.9188)	(−3.4283)	(−3.5342)
CAPX	0.2794**	0.2810**	−0.0036	−0.0046
	(2.1821)	(2.1938)	(−0.0275)	(−0.0362)
SIZE	6.7959***	6.7822***	−0.3073	−0.1456
	(13.5241)	(13.4710)	(−0.5404)	(−0.2361)
CashVOLT	15.9788***	15.8884***	−4.4325	−4.5860
	(4.8694)	(4.8430)	(−0.7630)	(−0.7885)
StockVOLT	0.0119	0.0113	0.0348	0.0336
	(1.1943)	(1.1129)	(1.2602)	(1.2372)
BSIZE	3.0631*	2.8974*	3.0152	2.9999*
	(1.8299)	(1.7222)	(1.6232)	(1.7288)
GDP		−0.1053		0.0642
		(−0.4271)		(0.2416)
INF		0.5312*		0.6841**
		(1.8415)		(2.2034)
UNEMP		0.5432		0.6326*
		(1.4874)		(1.7290)
CoC		−1.8840		3.7402
		(−0.5126)		(1.0943)
GOVEF		8.6883*		7.5977
		(1.8193)		(1.1836)
REGQ		1.1594		2.2330
		(0.3661)		(0.7149)
EPU		−2.7641*		−3.3738**
		(−1.7049)		(−2.0539)
Constant	−98.4451***	−100.0873***	11.6182	1.1135
	(−15.4100)	(−7.5863)	(1.0741)	(0.0570)
Year effects	Yes	Yes	Yes	Yes
Firm effects	No	No	Yes	Yes
Country effects	Yes	Yes	Yes	Yes
Industry effects	Yes	Yes	Yes	Yes
Observations	12,517	12,517	12,517	12,517
Adj R²	0.235	0.236	0.403	0.404

Note(s):

This table reports the regression results for the impact of firm-level political risk on ESG controversies. Column (1) shows the regression results for the impact of firm-level political risk on ESG controversies after controlling for both firm-level financial and governance variables. Column (2) shows the regression results of the main model specified in equation (2). The regressions shown in Columns (1) and (2) are controlled for year, country and industry fixed effects. The regressions shown in Columns (3) and (4) are tested under firm fixed effects along with year, country and industry fixed effects, respectively. Under these fixed effect conditions, Column (3) shows the regression results for the impact of firm-level political risk on ESG controversies after controlling for both firm-level financial and governance variables. Column (4) shows the regression results of the main model specified in equation (2). The independent and control variables are winsorised at the 1 and 99% levels to mitigate the effect of outliers. Coefficients with ***, ** and *are significant at the 0.01, 0.05 and 0.10 levels, respectively. Robust t-statistics in parentheses. All variables are defined in the Appendix 1

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