ESG performance and controversies effects on dividend payout ratio under the CSRD framework: evidence from the EU

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Contributes to the ESG-dividend literature by integrating regulatory pressure (CSRD) as a moderating factor, offering a nuanced view of how mandatory reporting affects corporate payout policy.

🏢実務担当者:Corporate finance and sustainability teams should anticipate that CSRD compliance may require resource reallocation away from dividends, potentially impacting shareholder return strategies.

🏛政策担当者:Policymakers should consider that mandatory disclosure mandates can shift corporate resource allocation from dividends to compliance investments, affecting shareholder value.

This study aims to examine how environmental, social and governance (ESG) performance and ESG controversies influence dividend payout decisions among European listed firms, with particular emphasis on the effect of the Corporate Sustainability Reporting Directive (CSRD). Using a balanced panel of 550 European non-financial listed firms and 6,050 firm-year observations covering the period 2014–2024, the study employs fixed-effects, mixed-effects and instrumental-variables (2SLS) estimation methods. Dividend policy is proxied by the dividend payout ratio, while ESG performance is measured using aggregate ESG scores and individual environmental, social and governance pillars. ESG controversies score and a CSRD regulatory dummy are incorporated to capture reputational shocks and regulatory pressure. The study indicates that ESG performance is positively correlated with dividend payout ratios, primarily driven by environmental and social factors. ESG controversies do not directly and statistically significantly affect dividend payouts, even after controlling firm-specific heterogeneity and financial fundamentals. Importantly, CSRD plays a significant moderating role: while dividend payouts are higher during CSRD-related years, the positive association between ESG performance and dividends weakens under CSRD pressure, suggesting a reallocation of resources toward compliance, disclosure and sustainability investments during the regulatory transition period. This study advances the ESG-dividend literature by integrating ESG performance, ESG controversies and mandatory sustainability reporting within a unified empirical framework. It provides early evidence on how the CSRD reshapes the ESG-dividend nexus, highlighting regulatory pressure as a key boundary condition in the sustainability-payout relationship.

• semanticscholar https://doi.org/10.1108/jbsed-02-2026-0157first seen 2026-07-28 05:46:51