An Empirical Research of the Relationship Between ESG Performance and Firm Value

Research Article
Open access

An Empirical Research of the Relationship Between ESG Performance and Firm Value

Yi Sun 1*
  • 1 University of Manchester    
  • *corresponding author yi.sun-11@student.manchester.ac.uk
Published on 10 November 2023 | https://doi.org/10.54254/2754-1169/41/20232021
AEMPS Vol.41
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-83558-103-2
ISBN (Online): 978-1-83558-104-9

Abstract

In the context of the continuous promotion and implementation of ESG concepts around the world, this paper aims to study the correlation between ESG scores and the share prices of companies in different regions and industries. Based on the stock price data and ESG scores of the top 30 companies by market capitalization in the semiconductor industry, car manufacturing industry, and financial services industry, as well as the stock price data and ESG scores of the top 30 companies by market capitalization in the United States, China, and Japan, the linear fit model is constructed to analyze the correlation and intercept. It is found that the ESG score is positively correlated with company stock price in most situations, which means that the improvement of the ESG score often implies the improvement of the company’s share price. According to the economic environment of different industries and countries, the correlation and intercept are different. Usually, the correlation or intercept is more evident in high-end industries or regions with better economies, also the ESG level is better.

Keywords:

ESG score, stock price, causality

Sun,Y. (2023). An Empirical Research of the Relationship Between ESG Performance and Firm Value. Advances in Economics, Management and Political Sciences,41,1-8.
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References

[1]. Capelle-Blancard, G., & Petit, A.: Every Little Helps? ESG News and Stock Market Reaction. Journal of Business Ethics, 157(2), 543-565 (2019).

[2]. Berg, F., Koelbel, J. F., & Rigobon, R.: Aggregate confusion: The divergence of ESG ratings (Working paper). MIT (2019).

[3]. Wang, H., Shen, H., & Li, S.: ESG performance and stock price fragility. Finance Research Letters, 104101 (2023).

[4]. Wang, J., Hu, X., & Zhong, A.: Stock market reaction to mandatory ESG disclosure. Finance Research Letters, 53, 103402 (2023).

[5]. Li, H., Zhang, X., & Zhao, Y.: ESG and Firm's Default Risk. Finance Research Letters, 47(Part B), 102713 (2022).

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

[7]. Sustainable Finance - ESG scores. Refinitiv. https://www.refinitiv.com/en/sustainable-finance/esg-scores, last accessed 2023/6/11.

[8]. Companiesmarketcap. https://companiesmarketcap.com/, last accessed 2023/6/11.

[9]. Yin, X., Li, J., & Su, C.: How does ESG performance affect stock returns? Empirical evidence from listed companies in China. Heliyon, 9(5), e16320 (2023).

[10]. Leite, B.J., Uysal, V.B.: Does ESG matter to investors? ESG scores and the stock price response to new information. Global Finance Journal, 57 (2023).

Cite this article

Sun,Y. (2023). An Empirical Research of the Relationship Between ESG Performance and Firm Value. Advances in Economics, Management and Political Sciences,41,1-8.

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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About volume

Volume title: Proceedings of the 7th International Conference on Economic Management and Green Development

ISBN：978-1-83558-103-2(Print) / 978-1-83558-104-9(Online)
Editor：Canh Thien Dang
Conference website: https://www.icemgd.org/
Conference date: 6 August 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.41
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. Capelle-Blancard, G., & Petit, A.: Every Little Helps? ESG News and Stock Market Reaction. Journal of Business Ethics, 157(2), 543-565 (2019).

[2]. Berg, F., Koelbel, J. F., & Rigobon, R.: Aggregate confusion: The divergence of ESG ratings (Working paper). MIT (2019).

[3]. Wang, H., Shen, H., & Li, S.: ESG performance and stock price fragility. Finance Research Letters, 104101 (2023).

[4]. Wang, J., Hu, X., & Zhong, A.: Stock market reaction to mandatory ESG disclosure. Finance Research Letters, 53, 103402 (2023).

[5]. Li, H., Zhang, X., & Zhao, Y.: ESG and Firm's Default Risk. Finance Research Letters, 47(Part B), 102713 (2022).

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

[7]. Sustainable Finance - ESG scores. Refinitiv. https://www.refinitiv.com/en/sustainable-finance/esg-scores, last accessed 2023/6/11.

[8]. Companiesmarketcap. https://companiesmarketcap.com/, last accessed 2023/6/11.

[9]. Yin, X., Li, J., & Su, C.: How does ESG performance affect stock returns? Empirical evidence from listed companies in China. Heliyon, 9(5), e16320 (2023).

[10]. Leite, B.J., Uysal, V.B.: Does ESG matter to investors? ESG scores and the stock price response to new information. Global Finance Journal, 57 (2023).

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