Using a sample of publicly listed Brazilian companies, this study investigates the directional cause-and-effect relationship between market structure, ESG performance, and corporate efficiency under a Stochastic Structural Relationship Programming (SSRP) model. The empirical evidence is threefold.

First, the findings indicate that companies with better environmental performance tend to be more efficient, while lower ESG performance and weaker corporate governance practices are associated with higher levels of efficiency. Second, the study suggests that market structure measures (i.e., competition, concentration, and market power) have heterogeneous impacts on various ESG indices.

Specifically, greater market competition is associated with lower concentration, better ESG and environmental performance, but worse corporate governance performance. Meanwhile, market power may improve only environmental and governance performance. Third, the market structure proxies employed in this study are significantly linked to corporate efficiency. These findings offer practical implications for various stakeholders and suggest avenues for future research building on this evidence.

Researchers: Pedro Moskovics, Peter Wanke, Yong Tan, Ali M. Gerged
Brazilian School of Public and Business Administration (FGV EBAPE)

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