A QUANTITATIVE ANALYSIS OF ESG PERFORMANCE AND ITS EFFECTS ON FINANCIAL PERFORMANCE
Date
2023-09-02
Authors
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Publisher
Saudi Digital Library
Abstract
Recently, the Environmental, Social, and Governance (ESG) goals are becoming a primary
focus for companies worldwide. Studies have found positive and negative relationships
between good ESG performance and the company’s financial performance. Hence, this
research aims to explore the relationship between ESG and financial performance and find
which balance sheet element has the most significant relationship with ESG performance.
From a ranked list of 100 global companies, 46 firms had complete financial data for three
years (from 2020 to 2022) and were eligible to be included in analysis. Using each
company’s ESG rating and financial data, two statistical tests were performed to determine
the relationship between ESG rating and financial performance. Although one significant
relationship was found, both tests have shown weak positive and negative relationships.
The hypothesis that ESG ranking will have a significant positive relationship with at least
two of the five indicators used: net profits and operating revenue was not proven by the
findings of this study.
Description
Keywords
ESG, Accounting