How Does ESG Performance Affect Firm Value

Abstract

With an increasing number of companies applying ESG-related activities, many researchers have recently focused on what effects could be brought to the firms value by the firm ESG performance. Researchers have two main views on this relationship. One view is that the ESG performance and disclosure of nonfinancial reports play an important role in improving a firms value and sustainable development. The other view is that ESG performance is not only meaningless for a firms value but also harmful to the firms value, especially for firms in developing countries. But firms they used for testing the relationship may belong to different industrial fields. So the firms used in this article would belong to the technology, energy, and finance fields To avoid the essential distinctions between different firms that belong to different industrial fields. After analyzing the MSCI EGS ratings history data over the last five years or since records began and the stock prices during the corresponding periods for these three industries respectively, the benefits on a firms value brought by the better ESG performance tend to be more obvious in the technology and finance industries than the firms in the energy industries.