The Role of G(overnment) in Corporate ESG Policies

33 Pages Posted: 22 Nov 2022

See all articles by Nickolay Gantchev

Nickolay Gantchev

University of Warwick - Warwick Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Jim Goldman

University of Warwick - Warwick Business School

Shu Zhang

Exeter Business School

Date Written: November 18, 2022

Abstract

We study how the allocation of federal contracts influences the sustainability of corporate policies. We find that a firm’s poor record of environmental and social (E&S) incidents is associated with losing government contracts and facing worse contract terms. ‘Punished’ contractors improve their E&S policies in subsequent years and their government business gets reallocated to other firms with lower information asymmetry. These effects are substantially stronger for small, women-owned, and minority-owned businesses. Our results indicate that federal procurement plays not only a disciplining role in improving firms’ E&S policies, but also a distributive role in creating opportunities for disadvantaged businesses.

Keywords: Government contracts, ESG, Sustainability, Corporate governance, Firm diversity

JEL Classification: G34, G38, H57, M14

Suggested Citation

Gantchev, Nickolay and Goldman, Jim and Zhang, Shu, The Role of G(overnment) in Corporate ESG Policies (November 18, 2022). Available at SSRN: https://ssrn.com/abstract=4280531 or http://dx.doi.org/10.2139/ssrn.4280531

Nickolay Gantchev (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

HOME PAGE: http://www.NickolayGantchev.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

HOME PAGE: http://cepr.org

European Corporate Governance Institute (ECGI) ( email )

HOME PAGE: http://ecgi.global/users/nickolay-gantchev

Jim Goldman

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

Shu Zhang

Exeter Business School ( email )

Exeter, EX3 0AZ
United Kingdom

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