Sustainability has become a significant issue for firms and investors throughout the world, although it cannot be attained if policies impact the stability of firms’ dividend policies. In this paper, we use data from the Stoxx Euro 600 firms from 2000 to 2019 and the ESG (environmental, social and governance) scores from Thomson Reuters to assess the relationship between ESG responsibility performances and the firm’s dividend policy. The results indicate that more sustainable firms exhibit a more stable dividend payout. This result is also valid when the ESG pillars are analysed, specifically, the environmental and governance pillars. The findings further suggest that higher ESG scores reveal better long-term alignment with shareholders and other stakeholders due to more proportionally stable profit sharing.

This study examines the association between firms’ environmental, social, and governance (ESG) performance and the cost of capital for the largest European firms listed on the STOXX Euro 600 in a large panel from 2002 to 2018. We find that ESG is priced by both debt and equity markets, although in different directions. While better ESG performance is associated with a lower cost of equity, the relationship is positive regarding the cost of debt. We also account for industry idiosyncrasies. The relationship with the cost of equity is penalized for firms lagging in ESG performance compared with industry peers, and the industry median corporate sustainability performance score is around optimal to balance the cost of equity and cost of debt. We also find that ESG is not influential in shaping firms’ cost of capital in periods of financial and sovereign crises. Overall, in the same research setting, we find that the channels of firms’ cost of capital composition behave differently in response to changes in sustainability performance.

Is corporate tax avoidance associated with board meetings and attendance? Despite the large amount of research in management and finance on the impact of boards in several firm decisions, there is very little research that associates boards with tax avoidance. In this article, we look at firms listed on the London Stock Exchange during the period 2002–2015 and analyze whether a higher frequency of board meetings in the UK is associated with lower corporate tax liability. Our findings show that board meetings and attendance rate exert opposite effects, although the frequency of meetings is associated with lowering the tax liability. However, the association does not hold in a linear way. Tax-avoiding firms pay about 3 percent less effective tax rate, which is associated with average levels of meetings frequency, whereas those in the upper tail of the effective tax rate distribution benefit from a combined decrease of about 5–6 percent in the effective tax rate. The results conclusively support the view that a more resilient and focused control of board members mitigates opportunistic behavior and rent-seeking, thus enabling managers to engage in tax avoidance strategies.