Prioritizing CSR components for value enhancement: Evidence from the financial industry in developed and emerging markets.

This study uses structural equation modeling to prioritize CSR components including environmental (E), social (S), and governance (G) performance at the ESG indicator and sub-indicator levels. Based on 1029 (471) companies in the financial industry of developed (emerging) markets over the period of 2010-2020, the results show that the combined effects of CSR components enhance stock value, with relatively stronger impacts in developed markets than emerging markets. The priority of CSR components for value enhancement at the ESG indicators and sub-indicators depends on the levels of market development. Specifically, governance (governance) is the key value-driver, followed by environmental (social), and social (environmental) dimensions for developed (emerging) markets. This indicates that governance is the critical value-driver for companies in the financial industry. At the ESG sub-indicator level, resource use (innovation), community (product responsibility), and management (CSR strategy) are the critical value-drivers for E, S, and G performance in developed (emerging) markets, respectively. These findings enable corporate managers to prioritize CSR components by the top-down decisions on the ESG indicators, followed by their sub-indicators.