Geography of Sin Factors and ESG Practices in the United States
The recent momentum of ESG suggests a deviation from the classical view of profit-maximization being the sole responsibility of a company. The institutional theory suggests that the social context of where the company is headquartered plays an important role in the corporate decision-making process. However, the impact of negative social norms on corporate ESG performance remains blank in the literature. In this thesis, we constructed a county-level dataset for societal "sin" factors in the United States, which are found to have a negative impact on corporate ESG performance. By introducing the external "sin" factors, we help to address the endogeneity problem in prior studies of “sin stock”. Our findings also spotted the mimetic pressure of a "sinful" environment on managers, which may lead them to behave irresponsibly on matters over which they have discretionary power.
ESG, Sin, Institutional theory, Social norms, Corporate Finance
Master of Science (M.Sc.)