Impact of environmental, social and governance initiatives on firm value: Analysis using AI-based ESG scores for Japanese listed firms

Zhixiong Chen, Kohei Sugiyama, Kazuyuki Tasaka, Tomomi Kito and Yukihiro Yasuda

Research in International Business and Finance, 2024, vol. 70, issue PA

Abstract: This paper is the first study to examine the relationship between ESG initiatives and firm value for almost all Japanese listed firms. By constructing our unique AI-based ESG (Environmental Social Governance) scores that have higher coverage than existing ESG scores, we score and analyze firms that have not previously been given ESG scores and provide more robust evidence for the impact of ESG initiatives on firm value. Our unique AI-based ESG scores are classified as ESG disclosure scores. We empirically show that Japanese listed firms engaging in ESG activities have a significantly higher Tobin’s Q and higher volatility. We use the COVID-19 pandemic to eliminate reverse causality in our analysis.

Keywords: ESG scores; Natural language process; Tobin’s Q; COVID-19 pandemic (search for similar items in EconPapers)
JEL-codes: C83 D22 M14 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:70:y:2024:i:pa:s0275531924000965

DOI: 10.1016/j.ribaf.2024.102303

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