| Abstract [eng] |
The main purpose of this master’s thesis is to determine the ESG impact on firm value and financial results of companies listed on the STOXX Europe 600 Index. The study uses the analysis of research papers, grouping, systematization and summarization of data, correlation, and panel data regression analysis. The master thesis consists of literature analysis, methodology, research, interpretation of the results and conclusions with recommendations for future studies. The literature analysis part examines the concept of ESG and indicates different types of ESG disclosure. It also specifies the methods of determining the firm’s value and indicates the ESG impact on financial results and firms value in different empirical studies. The literature analysis concludes that there are direct and indirect impacts of ESG on firm value and financial results. The direction of the impact depends on the market in which the company operates. The research uses data of 306 companies from the STOXX Europe 600 Index for the period of 2015 to 2022. 1 year lag is used for the ESG scores as it is assumed that the impact occurs later. The panel data regression analysis results suggest that aggregated ESG score has a statistically significant positive impact on return on assets. The analysis with individual ESG scores shows that only environment score has statistically significant positive impact on return on assets. The study outcomes indicate that the combined ESG score exerts a statistically significant negative impact on Tobin’s Q. The environment score shows a statistically significant negative impact on Tobin’s Q. The impact of social and governance scores on Tobin’s Q are statistically insignificant. The conclusions summarize that 1 year lagged ESG impact is different when analyzing accounting-based and market-based measures. ESG efforts may be more beneficial to return on asset than Tobin's Q one year later. From a financial performance perspective, positive results are more likely to occur due to environmental factors, as they can obtain cost saving. However, investors follow shareholders theory as they underestimate these efforts. Recommendations for future studies suggest selecting a sample so it would not be affected by the biggest sectors or countries. The author believes that the results could be beneficial to investors, management, and policy makers. In addition, this research is expected to enhance the academic literature regarding the impact of ESG on firm value and financial results. |
