Institutional Governance Regimes and Firm-Level ESG Risk in Europe
Irsida KOPLIKU
https://doi.org/10.18267/pr.2026.vol.2587.17
Abstract: This paper examines the relationship between national institutional governance and firm-level ESG risk in Europe. Using Worldwide Governance Indicators, countries are classified into institutional governance regimes through k-means clustering. Three regimes are identified: a mature regime including Northern and Western European countries and Czechia; an intermediate regime comprising Southern Europe and other Central and Eastern European (CEE) countries; and a low-capacity regime represented by Türkiye. Analysis of variance reveals statistically significant differences in ESG risk across governance regimes. Firms operating in mature institutional environments exhibit lower ESG risk, while higher risk is associated with weaker governance settings. Further mean comparison tests within the intermediate regime indicate that firms in CEE countries display significantly higher ESG risk than firms in Southern Europe, despite similar institutional classifications. The findings underline the role of institutional quality and regional heterogeneity in shaping ESG risk across Europe.
Keywords: ESG risk; institutional governance; Central and Eastern Europe; cluster analysis; sustainability
JEL Classification codes: G30, Q56, O43.
Fulltext: PDF
Published by: Prague University of Economics and Business, Oeconomica Publishing House
Year of publication: 2026
Online publication date: 20 May 2026
Copyright: Authors of the papers
ISBN 978-80-245-2587-7
ISSN 2453-6113
Pages 201-211