Is ESG more comprehensive than governance? : What dividends reveal

Anolick, Nina ORCID: https://orcid.org/0009-0008-3787-7021, Posselt, Helena ORCID: https://orcid.org/0009-0004-2994-3333 and Wagner, Niclas ORCID: https://orcid.org/0000-0003-2009-6030 (2026) Is ESG more comprehensive than governance? : What dividends reveal. Finance Research Letters, 93 . DOI 10.1016/j.frl.2026.109494

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Official URL: https://doi.org/10.1016/j.frl.2026.109494

Abstract

We examine the relationship between ESG performance and dividend payout policy across European and U.S. firms. Our findings reveal a positive relationship, primarily driven by the environmental and social dimensions of ESG, while governance plays a minor role. Notably, the environmental and social pillars remain significant even after accounting for traditional corporate governance variables. This highlights that ESG captures distinct aspects of management decision-making that governance alone does not. ESG shows no significant effect on dividends in the energy sector, where firms in the U.S. maintain higher payouts, while European companies reinvest more due to regulatory pressure. Overall, ESG proves to be an independent and relevant driver of dividend policy.

Item Type:

Article

Uncontrolled Keywords:

Europe; Corporate governance; Energy sector; dividend policy; ESG performance;

JEL classification:

G30 - Corporate Finance and Governance: General
G35 - Payout Policy

Divisions:

Corvinus Institute for Advanced Studies (CIAS)

Subjects:

Ecology
Environmental economics
Management, business policy, business strategy

DOI:

10.1016/j.frl.2026.109494