Impact of Environmental, Social and Governance (ESG) on the Performance of Listed Real Estate Firms

Badr Hayar, Jan Muckenhaupt and Bing Zhu

ERES from European Real Estate Society (ERES)

Abstract: This paper investigates the relationship between ESG ratings and the operational, financial and market performance of Public Real Estate Companies (PRECs). By investigating a large sample of listed real estate firms from 2015 to 2021 in 35 countries, we find a positive relationship between overhead ESG metrics (and its sub-components) and firms’ market performance. Furthermore, we observe a negative relationship between ESG-Scores and the net operating income, general and administrative costs and financial costs. Our results remain robust after correcting for selection bias. Our results suggest that firms engaged in more socially responsible practices suffer from more financial costs and thus, have lower operational and financial performance. On the other hand, the stock market appreciates any decent investment in ESG, by overvaluing the corresponding companies.

Keywords: Esg; Listed Real Estate; Performance; Public Real Estate Companies (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2023-01-01
New Economics Papers: this item is included in nep-cfn, nep-eff, nep-env and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2023_71

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