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Estratégia em Organizações · Estratégia Internacional e Globalização

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Título

BRIDGING VOIDS: INSTITUTIONAL TRUST AND THE ROLE OF ESG IN FINANCIAL SUCCESS EU AND LATIN AMERICA

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Palavras-chave

Institutional trust ESG firm performance
Agradecimento: This research was funded by PPGCCA’s scholarship (Postgraduate program in accounting and administration, in Portuguese, Programa de Pós-Graduação em Ciências Contábeis e Administração), FAPESC (Foundation for Research and Innovation Support of Santa Catarina, in Portuguese, Fundação de Amparo à Pesquisa e Inovação de Santa Catarina) and CAPES (Coordination for the Improvement of Higher Education Personnel, in Portuguese, Coordenação de Aperfeiçoamento de Pessoal de Nível Superior).

Autores

  • Ivan Hadlich
    Universidade Regional de Blumenau - FURB
  • Andresa Erminda Spiess Leal DAvila
    UNIVERSIDADE REGIONAL DE BLUMENAU (FURB)
  • Tarcísio Pedro da Silva
    UNIVERSIDADE REGIONAL DE BLUMENAU (FURB)
  • Christian Daniel Falaster
    UNIVERSIDADE REGIONAL DE BLUMENAU (FURB)
  • Igor Tairan Mazzini
    Universidade Regional de Blumenau - FURB

Resumo

Introdução

Corporate sustainability has gained relevance with the rise of ESG practices. However, their impact on financial performance remains debated, especially in emerging markets. This study investigates how institutional trust and ESG practices influence firm performance in Latin America and the European Union, considering their distinct institutional contexts.

Problema de Pesquisa e Objetivo

What is the impact of institutional trust on financial performance, and does ESG moderate this relationship? The study aims to analyze whether ESG moderates the link between institutional trust and firm performance (Tobin-Q), comparing publicly traded companies in Latin America and the EU from 2013 to 2022.

Fundamentação Teórica

The study draws on institutional theory (North, 1990; Acemoglu & Robinson, 2011) and the concept of institutional voids (Khanna & Palepu, 1997). It also engages with ESG and governance literature (Gillan et al., 2021), emphasizing how institutions and social norms shape organizational performance.

Metodologia

A linear regression with sector and year fixed effects was applied to a balanced panel of 4,224 observations from 528 public companies in 32 countries (2013–2022). Variables included Trust (WVS), ESG (Refinitiv), corruption control, GDP, leverage, ROA, board independence, firm age, and dummies for region and COVID.

Análise dos Resultados

The main hypotheses were rejected. Institutional trust had a negative effect on financial performance, and ESG did not show a significant moderating effect. However, governance (board independence) was positively related to performance. Firms in the EU outperformed those in Latin America, highlighting institutional influence.

Conclusão

In fragile institutional contexts such as Latin America, institutional trust and ESG do not directly lead to better performance. In contrast, in robust contexts like the EU, strong governance structures positively affect outcomes, highlighting the importance of institutional conditions in ESG effectiveness.

Contribuição / Impacto

The study shows ESG’s limited role in weak institutional environments and emphasizes the need for stronger institutions and governance. It addresses calls for more research in emerging markets (Narula et al., 2024) and contributes with theoretical, practical, and social insights aligned with the UN’s SDGs.

Referências Bibliográficas

Acemoglu, D., & Robinson, J. (2011). Why Nations Fail.
Greenwood, R., Hinings, C. R., and Whetten, D. (2014). Rethinking institutions and organizations.
Gillan, S. et al. (2021). Journal of Financial Economics.
Khanna, T., & Palepu, K. (1997). Institutional Voids and Emerging Markets.
Lounsbury, M. (2023). The problem of institutional trust
Narula, R. et al. (2024). Journal of International Business Studies.
North (1990).A transaction cost theory of politics
Williamson, O. E. (1993). Calculativeness, trust, and economic organisation
Zucker, L. G. (1986). Production of trust

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