Research Information System
Thesis Type: Postgraduate
Institution Of The Thesis: TED University, Graduate School, Engineering Management, Turkey
Approval Date: 2022
Thesis Language: English
Student: İpek Solmaz
Supervisor: Işıl Sevilay Yılmaz
Abstract:
In this study, we
examine the effect of Environmental, Social, and Governance (ESG) practices on firms'
financial performances. Using a sample of approximately 7000 firms across 41
countries from 2002 to 2019, we test whether ESG performance affects the firms'
financial success. The financial performance is measured by four dependent
variables: Return on Assets
(ROA), Return on Equity (ROE), Earnings per Share (EPS), and Market-to-Book
Ratio (MTBV). We compile the ESG data from Refinitiv Eikon and financial data
from Datastream.
The fixed-effects regression models are run for different samples, including 1)
full sample, 2) by industry, 3) by development level, and 4) by time period. For the full
sample, we report that ESG combined score positively and significantly affects
firm financial performance. The environmental pillar score affects EPS and MTBV
significantly positive, and social pillar score has positive and significant
effect on ROA, ROE and MTBV. We do not report a significant effect of
governance pillar score on the financial performance. However, the outcomes
vary across different sub-samples, meaning that the relationship between ESG
practices and financial performance depends on the sample that we use.
Keywords: ESG,
Financial Performance, Sustainability, Sustainable Development Goals, Social
Finance