Browsing by Author "Stein, Sina"
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- Effect of the European NFRD on firm and ESG performancePublication . Stein, Sina; Venter, ZoëThis thesis investigates the second-order consequences of the European Directive 2014/95, also known as the Non-Financial Reporting Directive (NFRD). The mandate came into force in 2017 and binds large European public firms to disclose non-financial information regarding their environmental, social, and corporate governance (ESG) performance. The study employs a difference-in-differences (DiD) research design to assess the impact the mandate had on affected public firms in the EU (treatment group) relative to a control group of unaffected US firms, matched based on a propensity score and the nearest-neighbor method. The analysis, based on data from 2011 to 2021, shows that the NFRD successfully increased sustainability performance of European firms in relation to American firms, especially in corporate governance and social concerns. However, this improvement was paid for by a decrease in profitability and firm performance in terms of ROE, ROA, and Tobin’s Q. Surprisingly, firms with high pre-mandate ESG scores see a more significant decrease in market profitability proxies ROE and Tobin’s Q while low pre mandate scorers see a higher more severe decrease in ROA.