DOES ESG PERFORMANCE AFFECT THE FINANCIAL PERFORMANCE OF ENVIRONMENTALLY SENSITIVE INDUSTRIES? A COMPARISON BETWEEN EMERGING AND DEVELOPED MARKETS

Year 2021, Volume: 14 Issue: 1, 135 - 136, 31.12.2021

Nasruzzaman Naeem Serkan Cankaya

https://doi.org/10.17261/Pressacademia.2021.1509

Abstract

Purpose- The study aims to investigate whether the ESG performance of corporations from environmentally sensitive industries has any
effects on their financial performance and whether the impacts of the ESG performance of environmentally sensitive corporations differ
between developed and emerging countries.
Methodology- The ESG performance scores and financial performance scores for a 10-year period have been collected from the Thomson
Reuters Eikon database and panel regression analyses have been carried out to evaluate the economic value of the ESG performance of these
corporations.
Findings- Our findings show that the overall ESG performance of environmentally sensitive corporations has a significant positive relationship
with the return on equity (ROE) and the Tobin’s Q of the corporations. In addition, the overall ESG performance of the environmentally
sensitive corporations from developed countries has positive impact on the ROE and on the Tobin’s Q whereas the ESG performance score
of the environmentally sensitive corporations from emerging countries does not have any significant effect on their corporate financial
performance. The findings also indicate that the impacts of the ESG performance of environmentally sensitive corporations on their financial
performance are stronger in developed countries than in emerging countries.
Conclusion- This study contributes to the literature by adding a better understanding of the ESG-financial performance relationship of
environmentally sensitive corporations from both developed and emerging market contexts.

Keywords

ESG performance, environmentally sensitive industry, corporate social responsibility, financial performance

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