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Complex Firms, Controversial Outcomes: Global Evidence on ESG Failures and Remedies

Tunyi Tunyi Abongeh Orcid Logo, Ali Uyar Orcid Logo, Nejla Ould Daoud Ellili, Abdullah S. Karaman Orcid Logo

Business Strategy and the Environment

Swansea University Author: Tunyi Tunyi Abongeh Orcid Logo

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DOI (Published version): 10.1002/bse.70685

Abstract

We examine whether business complexity increases firms' exposure to negative environmental, social, and governance (ESG) outcomes, specifically ESG controversies, using a global panel of firms from 37 countries over the period 2002–2021. We further investigate the moderating roles of external m...

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Published in: Business Strategy and the Environment
ISSN: 0964-4733 1099-0836
Published: Wiley 2026
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URI: https://cronfa.swan.ac.uk/Record/cronfa71395
first_indexed 2026-02-09T02:23:24Z
last_indexed 2026-03-20T05:31:39Z
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spelling 2026-03-19T15:46:06.6695791 v2 71395 2026-02-09 Complex Firms, Controversial Outcomes: Global Evidence on ESG Failures and Remedies eefe2792c8eed5b49feede33981dfa53 0000-0002-5761-931X Tunyi Tunyi Abongeh Tunyi Tunyi Abongeh true false 2026-02-09 CBAE We examine whether business complexity increases firms' exposure to negative environmental, social, and governance (ESG) outcomes, specifically ESG controversies, using a global panel of firms from 37 countries over the period 2002–2021. We further investigate the moderating roles of external monitoring by financial analysts; internal governance mechanisms, including board independence and workforce gender diversity; and international policy frameworks, with particular emphasis on the Paris Agreement as a regulatory tightening mechanism. Our results show that business complexity is strongly and positively associated with ESG controversies worldwide. Analyst scrutiny amplifies, rather than mitigates, this effect, indicating that external capital market monitoring does not effectively discipline ESG risk in complex firms. In contrast, stronger internal governance, reflected in greater board independence and a higher proportion of female employees, significantly attenuates the complexity controversy link. We also find that the positive effect of complexity on ESG controversies weakens in the post-Paris Agreement period, consistent with heightened regulatory pressure and compliance expectations imposed on firms following the Agreement. Overall, the study provides novel cross-country evidence on how organizational structure shapes negative ESG outcomes, integrating insights from complexity and agency theories with important implications for managers, policymakers, and investors. Journal Article Business Strategy and the Environment 0 Wiley 0964-4733 1099-0836 analyst scrutiny, business complexity, ESG controversies, internal governance mechanisms, Paris Agreement, workforce gender diversity 11 3 2026 2026-03-11 10.1002/bse.70685 COLLEGE NANME Management School COLLEGE CODE CBAE Swansea University SU Library paid the OA fee (TA Institutional Deal) Swansea University 2026-03-19T15:46:06.6695791 2026-02-09T02:14:33.2798209 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Tunyi Tunyi Abongeh 0000-0002-5761-931X 1 Ali Uyar 0000-0002-4660-1798 2 Nejla Ould Daoud Ellili 3 Abdullah S. Karaman 0000-0001-5768-7382 4 71395__36425__a90c5e355c3a4c118774486b6d2a3404.pdf 71395.VOR.pdf 2026-03-16T16:06:49.7936093 Output 458123 application/pdf Version of Record true © 2026 The Author(s). Business Strategy and the Environment published by ERP Environment and John Wiley & Sons Ltd. This is an open access article under the terms of the Creative Commons Attribution License. true eng http://creativecommons.org/licenses/by/4.0/
title Complex Firms, Controversial Outcomes: Global Evidence on ESG Failures and Remedies
spellingShingle Complex Firms, Controversial Outcomes: Global Evidence on ESG Failures and Remedies
Tunyi Tunyi Abongeh
title_short Complex Firms, Controversial Outcomes: Global Evidence on ESG Failures and Remedies
title_full Complex Firms, Controversial Outcomes: Global Evidence on ESG Failures and Remedies
title_fullStr Complex Firms, Controversial Outcomes: Global Evidence on ESG Failures and Remedies
title_full_unstemmed Complex Firms, Controversial Outcomes: Global Evidence on ESG Failures and Remedies
title_sort Complex Firms, Controversial Outcomes: Global Evidence on ESG Failures and Remedies
author_id_str_mv eefe2792c8eed5b49feede33981dfa53
author_id_fullname_str_mv eefe2792c8eed5b49feede33981dfa53_***_Tunyi Tunyi Abongeh
author Tunyi Tunyi Abongeh
author2 Tunyi Tunyi Abongeh
Ali Uyar
Nejla Ould Daoud Ellili
Abdullah S. Karaman
format Journal article
container_title Business Strategy and the Environment
container_volume 0
publishDate 2026
institution Swansea University
issn 0964-4733
1099-0836
doi_str_mv 10.1002/bse.70685
publisher Wiley
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
document_store_str 1
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description We examine whether business complexity increases firms' exposure to negative environmental, social, and governance (ESG) outcomes, specifically ESG controversies, using a global panel of firms from 37 countries over the period 2002–2021. We further investigate the moderating roles of external monitoring by financial analysts; internal governance mechanisms, including board independence and workforce gender diversity; and international policy frameworks, with particular emphasis on the Paris Agreement as a regulatory tightening mechanism. Our results show that business complexity is strongly and positively associated with ESG controversies worldwide. Analyst scrutiny amplifies, rather than mitigates, this effect, indicating that external capital market monitoring does not effectively discipline ESG risk in complex firms. In contrast, stronger internal governance, reflected in greater board independence and a higher proportion of female employees, significantly attenuates the complexity controversy link. We also find that the positive effect of complexity on ESG controversies weakens in the post-Paris Agreement period, consistent with heightened regulatory pressure and compliance expectations imposed on firms following the Agreement. Overall, the study provides novel cross-country evidence on how organizational structure shapes negative ESG outcomes, integrating insights from complexity and agency theories with important implications for managers, policymakers, and investors.
published_date 2026-03-11T05:33:58Z
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score 11.100225

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