Advances in Economics, Management and Political Sciences

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Proceedings of the 2nd International Conference on Financial Technology and Business Analysis

Series Vol. 49 , 01 December 2023


Open Access | Article

How Does ESG Performance Affect Firm Value

Ruiqian Wang * 1
1 Krieger School of Arts and Sciences, Johns Hopkins University, Washington DC 20036, the United States

* Author to whom correspondence should be addressed.

Advances in Economics, Management and Political Sciences, Vol. 49, 26-33
Published 01 December 2023. © 2023 The Author(s). Published by EWA Publishing
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Citation Ruiqian Wang. How Does ESG Performance Affect Firm Value. AEMPS (2023) Vol. 49: 26-33. DOI: 10.54254/2754-1169/49/20230473.

Abstract

With an increasing number of companies applying ESG-related activities, many researchers have recently focused on what effects could be brought to the firm’s value by the firm ESG performance. Researchers have two main views on this relationship. One view is that the ESG performance and disclosure of nonfinancial reports play an important role in improving a firm’s value and sustainable development. The other view is that ESG performance is not only meaningless for a firm’s value but also harmful to the firm’s value, especially for firms in developing countries. But firms they used for testing the relationship may belong to different industrial fields. So the firms used in this article would belong to the technology, energy, and finance fields To avoid the essential distinctions between different firms that belong to different industrial fields. After analyzing the MSCI EGS ratings history data over the last five years or since records began and the stock prices during the corresponding periods for these three industries respectively, the benefits on a firm’s value brought by the better ESG performance tend to be more obvious in the technology and finance industries than the firms in the energy industries.

Keywords

ESG performance, ESG rating, firm value, stock prices

References

1. Boffo, R. and Patalano, R. (2020) ESG Investing: Practices, Progress, and Challenges. OECD Paris. Retrieved from www.oecd.org/finance/ESG-Investing-Practices-Progress-and-Challenges.pdf

2. Albertini, E. (2013) Does Environmental Management Improve Financial Performance? A Meta-Analytical Review. Organization & Environment, 26, 431–457.

3. Garcia, A.S. and Orsato, R.J. (2020) Testing the Institutional Difference Hypothesis: A Study About Environmental, Social, Governance, and Financial Performance. Bus Strat Env, 29, 3261–3272.

4. Xu, Z. (2022) Research on the Impact of ESG Performance on Corporate Value. Advances in Applied Mathematics, 11, 4313-4322.

5. Erhart, S. (2022) Take It with a Pinch of Salt-ESG Rating of Stocks and Stock Indices. International Review of Financial Analysis, 83, 102308.

6. Wong, W.C., Batten, J.A., Ahmad, A.H., Mohamed-Arshad, S.B., Nordin, S. and Adzis, A.A. (2021) Does ESG certification add firm value?. Finance Research Letters, 39, 101593.

7. Egorova, A.A., Grishunin, S.V. and Karminsky, A.M. (2022) The Impact of ESG factors on the performance of Information Technology Companies, Procedia Computer Science, 199, 339-345.

8. Jorgenson, D.W. and Weitzman, M.L., et al. (2023) NVIDIA Stock Price: A Leading Indicator of Semiconductor Demand. AC Investment Research Journal, 220.

9. Norouzi, N. (2021) Post-COVID-19 and Globalization of Oil and Natural Gas Trade: Challenges, Opportunities, Lessons, Regulations, and Strategies. Int J Energy Res, 45, 14338–14356.

10. Parihar, S.B. (2022) Investment Analysis of JP Morgan Chase & Co. Diss. Rashtrasant Tukadoji Maharaj Nagpur University.

Data Availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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Volume Title
Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
ISBN (Print)
978-1-83558-145-2
ISBN (Online)
978-1-83558-146-9
Published Date
01 December 2023
Series
Advances in Economics, Management and Political Sciences
ISSN (Print)
2754-1169
ISSN (Online)
2754-1177
DOI
10.54254/2754-1169/49/20230473
Copyright
© 2023 The Author(s)
Open Access
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

Copyright © 2023 EWA Publishing. Unless Otherwise Stated