When Does ESG Become Valuable? The Impact of ESG Ratings on Profitability and Market Value of Companies
The result's identifiers
Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F62156489%3A43110%2F25%3A43927265" target="_blank" >RIV/62156489:43110/25:43927265 - isvavai.cz</a>
Result on the web
<a href="https://doi.org/10.32065/CJEF.2025.02.02" target="_blank" >https://doi.org/10.32065/CJEF.2025.02.02</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.32065/CJEF.2025.02.02" target="_blank" >10.32065/CJEF.2025.02.02</a>
Alternative languages
Result language
angličtina
Original language name
When Does ESG Become Valuable? The Impact of ESG Ratings on Profitability and Market Value of Companies
Original language description
This study examines the impact of ESG (environmental, social, and governance) performance on corporate profitability and market value. Using a dataset of microeconomic panel data of 7,353 ESG-rated companies worldwide combined with macroeconomic data, fixed-effect regression models reveal that high ESG performance negatively impacts profitability, as measured by return on assets (ROA), but increases market value. This negative impact on profitability is particularly pronounced for companies with higher market value, indicating that companies may sacrifice short-term profitability to achieve higher market valuations. Conversely, the positive impact on market value appears to be particularly significant for companies with below-average traditional performance metrics. These findings contribute to a broader understanding of the dual impact and the trade-off between costs and benefits of ESG and suggest that while ESG engagement may reduce immediate financial returns, it enhances long-term market position and value.
Czech name
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Czech description
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Classification
Type
J<sub>imp</sub> - Article in a specialist periodical, which is included in the Web of Science database
CEP classification
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OECD FORD branch
50206 - Finance
Result continuities
Project
<a href="/en/project/GA23-07983S" target="_blank" >GA23-07983S: Corporate social behavior and responses to CSR policies, institutions, and economic distress</a><br>
Continuities
P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)
Others
Publication year
2025
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů
Data specific for result type
Name of the periodical
Finance a úvěr-Czech Journal of Economics and Finance
ISSN
0015-1920
e-ISSN
2464-7683
Volume of the periodical
75
Issue of the periodical within the volume
2
Country of publishing house
CZ - CZECH REPUBLIC
Number of pages
42
Pages from-to
128-169
UT code for WoS article
001518182100002
EID of the result in the Scopus database
2-s2.0-105010472391