Does ESG performance have an impact on financial performance? Evidence from Germany
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In: Journal of Global Responsibility, Vol. 8, No. 2, 29.08.2017, p. 169-178.
Research output: Journal contributions › Journal articles › Research › peer-review
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TY - JOUR
T1 - Does ESG performance have an impact on financial performance?
T2 - Evidence from Germany
AU - Velte, Patrick
PY - 2017/8/29
Y1 - 2017/8/29
N2 - Purpose: The purpose of this paper is to concentrate on environmental, social and governance performance (ESGP) in total and divided in each component and evaluate their impact on financial performance (FINP). Design/methodology/approach: The study covers a sample selection of companies listed on the German Prime Standard (DAX30, TecDAX, MDAX) for the business years 2010-2014 (412 firm-year observations). A correlation and regression analysis was carried out to evaluate possible links between ESGP as determined by the Asset4 database of Thomson Reuters and accounting and market-based measures of FINP (Return on Assets [ROA] and Tobin’s Q). Findings: ESGP has a positive impact on ROA but no impact on Tobin’s Q. Furthermore, by analyzing the three different components of ESGP, governance performance has the strongest impact on FINP in comparison to environmental and social performance. Originality/value: The analysis makes a key contribution to the empirical corporate social responsibility (CSR) research as the author breaks down ESGP into their three components and include both accounting-based and market-based FINP measures for the German setting for the first time. Not only companies but also regulators and researchers are affected by the notion that CSR and FINP are close together and should be lead to a successful stakeholder management.
AB - Purpose: The purpose of this paper is to concentrate on environmental, social and governance performance (ESGP) in total and divided in each component and evaluate their impact on financial performance (FINP). Design/methodology/approach: The study covers a sample selection of companies listed on the German Prime Standard (DAX30, TecDAX, MDAX) for the business years 2010-2014 (412 firm-year observations). A correlation and regression analysis was carried out to evaluate possible links between ESGP as determined by the Asset4 database of Thomson Reuters and accounting and market-based measures of FINP (Return on Assets [ROA] and Tobin’s Q). Findings: ESGP has a positive impact on ROA but no impact on Tobin’s Q. Furthermore, by analyzing the three different components of ESGP, governance performance has the strongest impact on FINP in comparison to environmental and social performance. Originality/value: The analysis makes a key contribution to the empirical corporate social responsibility (CSR) research as the author breaks down ESGP into their three components and include both accounting-based and market-based FINP measures for the German setting for the first time. Not only companies but also regulators and researchers are affected by the notion that CSR and FINP are close together and should be lead to a successful stakeholder management.
KW - Management studies
KW - ESG performance
KW - Corporate social responsibility
KW - Financial performance
KW - Stakeholder theory
KW - Corporate Governance
KW - Stakeholder management
KW - Sustainability Science
UR - http://www.scopus.com/inward/record.url?scp=85119146286&partnerID=8YFLogxK
U2 - 10.1108/JGR-11-2016-0029
DO - 10.1108/JGR-11-2016-0029
M3 - Journal articles
VL - 8
SP - 169
EP - 178
JO - Journal of Global Responsibility
JF - Journal of Global Responsibility
SN - 2041-2568
IS - 2
ER -