When Does ESG Become Valuable? The Impact of ESG Ratings on Profitability and Market Value of Companies

Kód výsledku v 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>

Výsledek na webu

<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>

Jazyk výsledku

angličtina

Název v původním jazyce

When Does ESG Become Valuable? The Impact of ESG Ratings on Profitability and Market Value of Companies

Popis výsledku v původním jazyce

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.

Název v anglickém jazyce

When Does ESG Become Valuable? The Impact of ESG Ratings on Profitability and Market Value of Companies

Popis výsledku anglicky

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.

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

—

OECD FORD obor

50206 - Finance

Projekt

<a href="/cs/project/GA23-07983S" target="_blank" >GA23-07983S: Sociální chování firem v reakci na CSR politiky, instituce a ekonomické problémy</a><br>

Návaznosti

P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)

Rok uplatnění

2025

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název periodika

Finance a úvěr-Czech Journal of Economics and Finance

ISSN

0015-1920

e-ISSN

2464-7683

Svazek periodika

75

Číslo periodika v rámci svazku

2

Stát vydavatele periodika

CZ - Česká republika

Počet stran výsledku

42

Strana od-do

128-169

Kód UT WoS článku

001518182100002

EID výsledku v databázi Scopus

2-s2.0-105010472391