This paper illustrates the impact of Environmental Social and Governance (ESG) disclosure on European corporate equity performance. In this study, we use an extensive data set of European ESG ratings provided by Bloomberg to demonstrate that ESG disclosure is associated with improved return growth, with the Governance pillar exhibiting the strongest effect on corporate performance. The impact of ESG disclosure on volatility is changing over time, suggesting that the existence of opaque ratings limits the transmission of information disclosure into corporate performance.

The value of American options depends on the exercise policy followed by option holders. Market frictions, risk aversion, or a misspecified model, for example, can result in suboptimal behavior. We study the sensitivity of American options to suboptimal exercise strategies. We show that this measure is given by the Gamma of the American option at the optimal exercise boundary. More precisely, “ifBis the optimal exercise price, but exercise is eitherbrought forward whenordelayed untila priceB̃has been reached, the cost of suboptimal exercise is given by ½ ×Γ(B) × (B−B̃)², whereΓ(B) denotes the American option Gamma.” Therefore, the cost of suboptimal exercise is second-order in the bias of the exercise policy and depends on Gamma. This result provides new insights on American options.

During the past two decades, researchers and professionals have increasingly explored the financial and macroeconomic implications of sustainable business practices, particularly through the lens of environmental, social, and governance (ESG) metrics. This review synthesizes evidence from financial economics and sectoral labor analysis to assess the impact of ESG performance and green employment on corporate financial performance (CFP) and broader economic growth. Using a discounted cash-flow framework and sectoral panel data from European economies (2008–2023), the findings reveal that robust ESG practices improve operating profits, reduce financial risk and support higher dividend distributions, while green jobs contribute significantly to Gross Value Added (GVA) and Gross Domestic Product (GDP), with each additional green job adding approximately EUR 101.920 to GVA and EUR 135.000 to GDP, in annual terms. Sectoral impacts are especially pronounced in construction, energy, and financial services, with annual contributions ranging from EUR 10.4 to EUR 11.1 million in GVA and EUR 13.7 to EUR 14.8 million in GDP. These results underscore the dual role of ESG as a financial indicator and strategic sustainability tool, advancing key United Nations Sustainable Development Goals (SDGs), including SDG 8 (Decent Work and Economic Growth), SDG 12 (Responsible Consumption and Production), SDG 13 (Climate Action), and SDG 17 (Partnerships for the Goals). The integration of green employment metrics into national productivity frameworks and corporate ESG strategies offers practical guidance to policymakers, investors, and cross-sector partners committed to sustainable development.

In this paper, we adapt the demand and supply framework introduced by Figuerola‐Ferretti and Gonzalo (Journal of Econometrics, 2010) to illustrate the dynamics of Pairs‐trading. We underline the process by which a finite elasticity of demand for spread trading determines the speed of mean reversion and pairs‐trading profitability. A persistence‐dependent trading trigger is introduced accordingly. Applied to STOXX Europe 600–traded equities, our strategy exploits price leadership for portfolio replication purposes and delivers Sharpe ratios that outperform the benchmark rules used in the literature. Portfolio performance and mean reversion are enhanced after firm fundamental factor restrictions are imposed.

Over the past two decades, researchers and practitioners alike have increasingly aimed to quantify the effects of corporate sustainable practices by studying the relationship between Environmental, Social, and Governance (ESG) metrics and corporate financial performance (CFP). This review employs the Discounted cash-flow (DCF) model to examine financial economics-based research on ESG factors, focusing on their impact on corporate performance through the lenses of cash-flow, idiosyncratic and downside risk, as well as systematic risk channels. The literature reveals four key mechanisms through which ESG characteristics in- fluence CFP, mapped within the numerator (cash-flow) and denominator (discount rate) com- ponents of the DCF framework. The link between ESG and cash-flow is examined through analyses of corporate ESG attributes and various financial profitability indicators. Firms with strong ESG performance demonstrate enhanced control over idiosyncratic risk via the cash- flow transmission channel. Additionally, the ESG–cost-of-capital link highlights how reduced systematic and downside risks contribute to improved financial performance. The reported results consistently point to a positive relationship between ESG performance and financial outcomes. This review underscores how ESG strategies not only signal financial strength but also promote alignment with the United Nations Sustainable Development Goals (SDGs). In particular, improved ESG performance supports SDG 8 (Decent Work and Economic Growth) by fostering resilient, long-term business models; SDG 12 (Responsible Consumption and Pro- duction) through corporate accountability; and SDG 13 (Climate Action) via environmental risk mitigation. These findings highlight ESG’s role as both a financial and sustainability lever, offering insights with far-reaching implications for policymakers, investors, and global sustainability partnerships (SDG 17).