It's the Environment, Stupid: Accumulated Advantage vs Rapid Attentional Shift on the Quest for Growth

This paper investigates two questions. First, I test whether the inclusion of environmental, social and governance (ESG) values in corporate communication influences firm growth. Then, I examine which form of value signaling is more efficient: the accumulation of advantage through consistent communication over long time periods, or rapidly changing value signaling that follows external trends? The results suggest that not all ESG-commitment affects firm growth in the same way. In fact, it is firms’ commitment to environmental-related values that truly makes the difference. Furthermore, rapid attention shifts to newly emerging values seem to pay off: firms that signaled their commitment to environment-related values after 2015, have higher predicted growth margins than firms that did not commit to these values.