The Impact of ESG Scores of Listed Companies on Firm Value: A Dual Perspective Based on Management Practices and Controversial Events
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Abstract
The regression analysis in this study examines the impact of ESG rating scores and other factors on firm value. The results show a mixed effect of ESG rating scores on firm value. This is a quantitative model. It incorporates the panel data regression. The present study also incorporates Wind ESG data. For Chinese enterprises looking for Environmental, Social, and Governance (ESG) ratings and data. The ESG Management Practices Score has a negative and significant impact. It indicates that higher scores in ESG management practices may lead to lower firm valuations. The ESG Controversies Score does not significantly affect firm value. Non-ESG factors such as return on equity (ROE), firm age, and market share show positive and significant relationships with firm value. However, firm size has a negative impact. These findings suggest that profitability, age, and market share positively influence firm valuation. Policy suggestions based on these findings include incentivizing firms to improve ROE and adopt sustainable practices. It supports transparent reporting in ESG initiatives, encouraging innovation and market expansion for older firms. It is promoting lean management practices for larger firms. These policies aim to enhance firm value while maintaining robust ESG standards. Hence, leading to sustainable growth.