All the following analysis are based on this information. The ASSET4 database does not, however, cover all the securities available to investors. The partial lack of data over the observed sample could effectively influence the conclusion reached following each of the analysis. The focus of the database is, indeed, on large more prominent companies and lacks details over small companies who might actually pursue high level ESG practices. Moreover, worth mentioning that the scoring associated to each company are based on a combination of financial data and human judgment. This add a layer of possible misalignment of information due to personal bias of the …show more content…
For future academic research, a consensus towards which ESG data to utilize is necessary to achieve similar conclusions regarding the added value of positive ESG activities towards financial returns. The positive coefficients connected to ESG factor loading are quite interesting and could stimulate research over the risk-return characteristic of ESG companies. Moreover, the risk lowering capabilities of ESG practices should receive further attention from academics. The pricing anomaly connected to high ESG scoring firm should be covered from future studies. Given the changing economic and social landscape, the reasons behind higher financial performance for CSR practice needs to be updated. This could result from higher capital inflow towards ESG-focus companies and not necessarily from the selection of investors and consumer over the products and services of ESG-focus firms compared to others. Parallel, a possible neglected effect could characterize those firms with lower ESG scores. Furthermore, the persistency of ESG scores for companies should be investigated. The improving or worsening development of ESG scores over time might affect public and investors perception over company performance. Last, research over market reaction following announcements of major ESG activities could unveil event-specific market movements connected with such announcements and