Business Law, Public Responsibility, and Ethics Commons^™

The Influence Of Regulatory Oversight On Environmental, Social, And Governance Ratings, John F. Torpey

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Firm performance in the specific areas of environmental stewardship, social responsibility, and corporate governance (ESG) has become an important criterion that investors use in determining a firm’s value. This empirical investigation, based on stakeholder theory examines the relationship between regulatory oversight and third-party ESG ratings. Our research methodology involved quantitative, observational, and retrospective analyses. The study population consisted of 471 firms from two heavily regulated industry sectors—the utility and financial sectors—and from two less regulated sectors—the information technology and consumer discretionary sectors. We compiled the ESG ratings for the firms from two independent rating services. The quantitative evaluation included multiple …