Title: ESG Ratings and Corporate Payout Policy
Author(s) : Julie Fitzpatrick
What is the relationship between Environmental, Social, and Governance (ESG) ratings and corporate payout policy? To the extent that firms with better ESG ratings might be regarded as more “stakeholder-friendly” than “shareholder-friendly,” one might expect such firms to have lower shareholder payouts (i.e., cash dividends and share repurchases). The present study examines the relationship between ESG ratings and corporate payout policy for Dow 30 firms during the period 2020-2022. The results indicate that high ESG risk rating firms (i.e., “shareholder-focused” firms) have higher total cash distributions to shareholders than low ESG risk rating firms.