The crossroads of ESG and religious screening on firm risk

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

Risultato della ricerca: Contributo in rivistaArticolo in rivista


Using a large and extended global dataset of non-financial firms (4624 listed entities from 2002 to 2018), we provide the first empirical evidence on how ESG and Sharia screenings interact and influence market risks. We link two contrasting literature streams: the risk reduction role that the stakeholder theory attributes to ESG scores, and the opposite effect for Sharia-compliance anticipated by the portfolio and agency theories. We find that when ESG scores are not considered, Sharia certification increases risks. We also prove that engagement in sustainable activities mitigates risks for both Sharia-compliant and conventional firms. More interestingly, we show that Sharia-compliant firms obtain a larger risk-mitigating effect for greater levels of ESG scores. These results are robust to endogeneity and to extensive additional checks. Our findings validate the hypothesized complementarity between ESG and Sharia screenings.
Lingua originaleEnglish
pagine (da-a)1-29
Numero di pagine29
RivistaResearch in International Business and Finance
Stato di pubblicazionePubblicato - 2021


  • Environmental Social Governance (ESG) scores
  • Islamic corporate finance
  • Market risks
  • Sharia-compliance screening
  • Sustainability practices


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