Firms’ sustainability, financial performance, and regulatory dynamics: Evidence from European firms

This study examines the association between firms’ ESG reputational risk and financial performance under EU regulatory policy changes COVID-19 period. Analyzing a panel of 1,816 European listed firms during period 2007–2021, we document evidence that with lower have reduced information asymmetry, are less constrained perform better. To establish causality, design quasi-natural experiment focusing on 2014/95/EU directive non-financial disclosing exogenous shock. Our findings robust to several estimation techniques address endogeneity, self-selection, model sensitivity.