Deciphering The Esg Performance Conundrum An Analysis Of The Relationship And Causality In Corporate Financial Performance
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Deciphering The Esg Performance Conundrum An Analysis Of The Relationship And Causality In Corporate Financial Performance
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Author :
language : en
Publisher: GRIN Verlag
Release Date : 2023-11-28
Deciphering The Esg Performance Conundrum An Analysis Of The Relationship And Causality In Corporate Financial Performance written by and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023-11-28 with Business & Economics categories.
Master's Thesis from the year 2023 in the subject Business economics - Investment and Finance, Kiel University of Applied Sciences (Economics), language: English, abstract: Financial performance is an essential measurement that companies are aiming to improve by following various strategies. These strategies could be environmental-, social- or governmental (ESG). However, in the literature, the relationship between company performance and ESG is under huge debate. On the one hand, studies show that ESG influences positively company performance by improving corporate sustainability as well as attracting investors and stakeholders. On the other hand, studies suggest an opposite impact on the company performance. Furthermore, some studies find no relationship between both of them. In light of these contradicting results, this study aims to investigate ESG in the context of company performance to shed light on their relationship and causality. Moreover, this study includes various indicators and variables that represent company performance. The overall outcome of this study suggests that the company performance has no significant impact on the ESG and vice versa.
An Empirical Analysis Of The Relationship Between Esg Performance And Corporate Financial Performance
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Author : Benedict Rotering
language : en
Publisher:
Release Date : 2022
An Empirical Analysis Of The Relationship Between Esg Performance And Corporate Financial Performance written by Benedict Rotering and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.
Assessing the performance of companies according to the non-financial aspects of environmental, social, and governance (ESG) has become an important topic in management research over the last few years. Organizations incorporate ESG initiatives into their core business strategies and researchers argue that there is a positive effect on the financial performance (FP) of companies. Despite the growing number of empirical studies yet contradictory results remain. Many researchers conclude that the ESG performance (ESGP) has a positive effect while others find a negative effect or even no association at all. There has been much debate in the literature about the metrics used to assess ESGP and FP. In addition, there has been identified a research gap concerning not only the direction of the effect but also whether there exists a causal relationship between ESGP and FP. The purpose of my thesis is to evaluate the bidirectional relationship between ESGP in total and its individual pillars -- Environmental performance (EP), Social performance (SP), and Governance performance (GP) -- and FP of companies. The main hypothesis is whether superior ESG performance positively influences the financial performance of companies. The thesis uses a panel data set of Standard & Poor's 500 companies for the years 2001-2020. The thesis uses linear regression models (OLS, FE, RE) to test possible relationships between ESGP and FP. In addition, the thesis applies a Granger causality test. ESGP is assessed with ESG scores provided by Refinitiv Eikon. FP is measured by the accounting-based metrics Return on Assets (ROA), Return on Equity (ROE), and Return on Invested Capital (ROIC). The total ESG score indicates significant positive effect on FP, while FP does not necessarily lead to improved ESGP. The individual pillar effects differ in the strength of the effect but in general confirm the direction as indicated by the total ESG score. However, the effect of FP on ESGP is not as clear and seems to be dependent on the financial metric used.
Adapting To Change
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Author : Egidio Palmieri
language : en
Publisher: Springer Nature
Release Date : 2024-01-11
Adapting To Change written by Egidio Palmieri and has been published by Springer Nature this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-01-11 with Business & Economics categories.
This book examines the evolving dynamics between banks and firms within the context of alternative finance and Environmental, Social, and Governance (ESG) integration. The book contributes to understanding the bank-firm relationship in light of the changing financial landscape and its implications for sustainable development. The book employs an empirical analysis to examine the bank-firm relationship in the context of alternative finance and ESG performance to assess firms’ riskiness, access to funds and cost of capital. The book addresses research gaps by comprehensively analysing the impact of alternative finance and ESG on the bank-firm relationship. It assists banks in adapting their financing practices and policies to align with emerging trends, and it offers insights for banks to evaluate and mitigate ESG-related risks effectively. It provides policy implications for promoting responsible lending, supporting the growth of alternative finance, and incentivising ESG integration in the financial sector. Ultimately, it contributes to formulating policies that foster a sustainable and inclusive financial system, and will be of interest to professionals and researchers in finance, alternative finance, and sustainable finance.
Sustainability Performance Litigation Provisions And Corporate Bond Spreads
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Author : Philipp A. Sostmann
language : en
Publisher: GRIN Verlag
Release Date : 2019-02-18
Sustainability Performance Litigation Provisions And Corporate Bond Spreads written by Philipp A. Sostmann and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-02-18 with Business & Economics categories.
Master's Thesis from the year 2017 in the subject Economics - Finance, grade: 8.5, Maastricht University, language: English, abstract: This study investigates the relation between corporate sustainability performance, corporations' litigation provisions and the yield spread of company issued bonds. Results show a significant negative relation between companies' ESG scores and their bond yield spreads. Most of this effect is accounted to the environmental performance of the company. Furthermore, I find support for a paradigm shift in the perception of sustainability performance. Whereas the effect on the yield spread was positive in years before the financial crisis, this relation turned negative subsequently. Besides that, country and industry facilitate a moderating role in the relationship. A strong ESG performance appears to significantly reduce bond spreads in the Mining industry and in more developed countries. Analyzing the relationship between sustainability performance and litigation provisions, I find that the ESG performance tends to reduce corporations' litigations in the years after 2012. Next to that, the social score has a significant positive relationship with litigation provisions. A mediation and moderation analysis of litigation provisions in the context of sustainability performance and yield spreads did not provide any significant findings. Finally, I conduct an event study attempting to find evidence for a possible causal relationship between sustainability performance and the yield spread.
Are Esg Factors Important For Companies
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Author : Anna Koskela
language : en
Publisher:
Release Date : 2019
Are Esg Factors Important For Companies written by Anna Koskela and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
The trend towards more transparency regarding environmental, social and governance (ESG) aspects of companies has been on the rise over the past decade. New accounting standards, consumer pressure, and government regulations have all contributed to the extension of corporate responsibilities beyond financial concerns. Growing amount of literature has also focused on understanding the effects of good social performance on financial performance. This thesis aims to contribute to the existing body of literature by analyzing the importance of ESG factors for companies by looking at the relationship between company ESG score and company performance. A correlation analysis is carried out by comparing ESG scores with return on assets (ROA), return on equity (ROE) and share prices. Additionally, a qualitative investigation of the benefits of ESG is performed using existing literature. The results suggest there is no relationship between ESG score and company financial performance in North-America, Europe nor Asia. Despite the fact that the potential advantages of strong corporate responsibility are not revealed by the findings of the correlation analysis, the thesis seeks to rely on the benefits on qualitative aspects to contend the importance of ESG factors for firms.
Climate Change Adaptation Governance And New Issues Of Value
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Author : Carlo Bellavite Pellegrini
language : en
Publisher: Springer Nature
Release Date : 2022-03-11
Climate Change Adaptation Governance And New Issues Of Value written by Carlo Bellavite Pellegrini and has been published by Springer Nature this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-03-11 with Business & Economics categories.
This book investigates sustainability, CSR, climate change adaptation, the relevance of ESG scores and their impact on firm value and growth. The first part of the book analyses the topics from a conceptual angle. The authors discuss how the concepts of self-consciousness and awareness drive the shift of the traditional concept of corporate mission towards more sustainable business models. The authors propose an in-depth analysis of the main challenges posed by climate change and of the initial policy-makers’ responses and provide their view on the central role of ESG scores and circular economy for growth and development. The authors conclude with an analysis of the main literature on the measurement of the relation between ESG scores and firms’ performance and cost of equity (CoE). The second part of the book contains comparative empirical evidence, supporting these theories across specific industries, and will be of interest to academics, researchers, and students of sustainability and impact finance.
Causality Between Corporate Social Performance And Financial Performance
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Author : Rim Makni Gargouri
language : en
Publisher:
Release Date : 2009
Causality Between Corporate Social Performance And Financial Performance written by Rim Makni Gargouri and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.
This study assesses the causal relationship between corporate social performance (CSP) and financial performance (FP). We perform our empirical analyses on a sample of 179 publicly held Canadian firms and use the measures of CSP provided by Canadian Social Investment Database for the years 2004 and 2005. Using the quot;Granger causalityquot; approach, we find no significant relationship between a composite measure of a firm's CSP and FP, except for market returns. However, using individual measures of CSP, we find a robust significant negative impact of the environmental dimension of CSP and three measures of FP, namely return on assets, return on equity, and market returns. This latter finding is consistent, at least in the short run, with the trade-off hypothesis and, in part, with the negative synergy hypothesis which states that socially responsible firms experience lower profits and reduced shareholder wealth, which in turn limits the socially responsible investments.
Does Esg Performance Have An Impact On Financial Performance Evidence From Germany
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Author : Patrick Velte
language : en
Publisher:
Release Date : 2018
Does Esg Performance Have An Impact On Financial Performance Evidence From Germany written by Patrick Velte and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
Purpose - This paper concentrates on environmental, social and corporate governance (ESG) performance in total and divided in each component and their impact on financial performance. Design/methodology/approach - The study covers a sample selection of companies listed on the German Prime Standard (DAX30, TecDAX, MDAX) for the business years 2010-2014 (412 firm-year observations). A correlation and regression analysis are carried out in order to evaluate possible links between ESG performance as determined by the AssetFour database of Thomson Reuters and accounting and market-based measures of financial performance (ROA and Tobin's Q). Findings - ESG performance has a positive impact on ROA but no impact on Tobin's Q. Furthermore, by analyzing the three different components of ESG performance, corporate governance performance has the strongest impact on financial performance in comparison to environmental and social performance. Originality/Value - The analysis makes a key contribution to the empirical CSR research as we break down ESG performance into their three components and include both accounting based and market based financial performance for the German setting for the first time. Not only companies but also regulators and researchers are affected by the notion that CSR and financial performance are close together and should be lead to a successful stakeholder management.
The Relationship Between Corporate Environmental Social And Governance Performance And Financial Performance Before And After The 2008 Financial Crisis
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Author : Yutong Wu
language : en
Publisher:
Release Date : 2021
The Relationship Between Corporate Environmental Social And Governance Performance And Financial Performance Before And After The 2008 Financial Crisis written by Yutong Wu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021 with Finance categories.
As increasing amount of evidence shows that corporate sustainability performance is associated with the long-term development of businesses, sustainable and responsible investment has been growing rapidly over the past decades. Along with the trend, a large number of investors are incorporating the corporate Environmental, Social and Governance (ESG) measures into their investment decision. Using datasets subtracted from Thomson Reuters, this thesis assesses the relationship between the corporate ESG performance and corporate financial performance, which includes financial risk, profitability, and market performance over the period from 2005 to 2011. This thesis finds that companies with top ESG scores tend to present lower volatility than ESG laggers, whereas the increase in volatility associated with financial crisis is higher for ESG leaders. In addition, ESG leaders are more likely to have lower Tobin’s Q, whereas the decrease in Tobin’s Q associated with financial crisis is lower for ESG leaders than ESG laggers. This thesis does not find a significant relationship between ESG performance and net margin before or after the financial crisis.
Esg And Financial Performance
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Author : Gunnar Friede
language : en
Publisher:
Release Date : 2015
Esg And Financial Performance written by Gunnar Friede and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
The search for a relation between environmental, social, and governance (ESG) criteria and corporate financial performance (CFP) can be traced back to the beginning of the 1970s. Scholars and investors have published more than 2,000 empirical studies and several review studies on this relation since then. The largest previous review study analyzes just a fraction of existing primary studies, making findings difficult to generalize. Thus, knowledge on the financial effects of ESG criteria remains fragmented. To overcome this shortcoming, this study extracts all provided primary and secondary data of previous academic review studies. Through doing this, the study combines the findings of about 2,200 individual studies. Hence, this study is by far the most exhaustive overview of academic research on this topic and allows for generalizable statements. The results show that the business case for ESG investing is empirically very well-founded. Roughly 90% of studies find a non-negative ESG-CFP relation. More importantly, the large majority of studies reports positive findings. We highlight that the positive ESG impact on CFP appears stable over time. Promising results are obtained when differentiating for portfolio and non-portfolio studies, regions, and young asset classes for ESG investing such as emerging markets, corporate bonds, and green real estate.
