Equity costs and risks in emerging markets: Are ESG and Sharia principles complementary?

M. Kabir Hassan, Laura Chiaramonte, Alberto Dreassi, Andrea Paltrinieri*, Stefano Piserà

*Autore corrispondente per questo lavoro

Risultato della ricerca: Contributo in rivistaArticolo in rivista


By proposing a novel continuous and time-varying measure of Sharia compliance, we investigate whether it enhances the effects of corporate social responsibility, proxied by Environmental -Social-Governance scores, on firms' equity costs and market risks in emerging countries. We construct a large dataset of non-financial listed firms incorporated in eighteen emerging markets, both Sharia-compliant and conventional (4612 firm-year observations from 2002 to 2018), finding a consistent, statistically significant, and negative association between the interaction of ESG scores and the Sharia sensitivity with the cost of equity. Moreover, we reveal that this negative relationship is mediated by firms' market risk (risk channel).
Lingua originaleEnglish
pagine (da-a)1-24
Numero di pagine24
Stato di pubblicazionePubblicato - 2023


  • Environmental Social Governance (ESG) scores
  • Sharia-compliance
  • Emerging markets
  • Market risks
  • Cost of equity
  • Islamic corporate finance


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