The financial and market consequences of environmental, social, and governance ratings: the implications of recent political volatility in Egypt

This study examines the combined impact of environmental, social and governance (ESG) ratings on the market and financial performance of Egyptian companies during the period from 2007 to 2016 and, thereby, determines the influence of the recent political revolutions – that broke out in the MENA region in early 2011 – on the association between ESG practices and corporate performance. Firms with high ESG ratings are found to enjoy a better financial and market performance. We found some evidence that the influence of ESG ratings on financial performance is more obvious after the revolutions than before the revolutions. These findings generally support the view that economic benefits are associated with environmental, social, and governance practices. The present results contribute to the growing literature on the economic consequences of ESG ratings, especially in relation to a context characterized by intense political/revolutionary changes.