The Impact of ESG Criteria on Firm Value: A Strategic Analysis of the Airline Industry

Ferah Yildiz, Faruk Dayi, Mustafa Yucel () and Ali Cilesiz ()
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Ferah Yildiz: Faculty of Business Administration, Kocaeli University, Kocaeli 41310, Turkey
Faruk Dayi: Faculty of Economics and Administrative Sciences, Kastamonu University, Kastamonu 37150, Turkey
Mustafa Yucel: Faculty of Economics and Administrative Sciences, Kastamonu University, Kastamonu 37150, Turkey
Ali Cilesiz: Kastamonu Vocational School, Kastamonu University, Kastamonu 37150, Turkey

Sustainability, 2024, vol. 16, issue 19, 1-23

Abstract: Environmental, social, and governance (ESG) factors are crucial in evaluating a company’s value. High ESG scores reflect ethical practices, social responsibility, and effective governance. This paper examines the impact of ESG criteria on firm value within the airline industry, focusing on their influence on operational efficiency, risk reduction, and financial performance. Using panel data analysis, the study evaluates ESG scores from 32 airline companies over the period of 2018–2023, with an explanatory power of 36.5%. The research explores how integrating environmental, social, and governance factors into strategic management can foster sustainable competitive advantage. It focuses on utilizing internal resources, meeting the needs of various interested parties, and balancing financial, social, and environmental performance. The findings indicate that while ESG practices enhance firm value through improved efficiency and risk management, they do not always lead to higher short-term firm value. Moreover, the study underscores the significance of governance in the airline industry, where robust governance structures can mitigate risks but may also increase costs. This research contributes to the literature by providing empirical evidence of the link between ESG performance and firm value in the airline industry, emphasizing the importance of integrating ESG principles into strategic management for long-term sustainability and financial success.

Keywords: strategic management; ESG performance; firm value; sustainability; airline industry (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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