The Effect of ESG (Environmental, Social And Governance) Scores on Company Performance: Evidence from the Manufacturing Industry in Turkey

Halil İbrahim Akpınar () and Mehmet Sabri Topak ()
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Halil İbrahim Akpınar: İstanbul University, Institute of Social Sciences, Department of Business Administration, İstanbul, Türkiye
Mehmet Sabri Topak: İstanbul University, Faculty of Economics, Department of Business Administration, İstanbul, Türkiye

EKOIST Journal of Econometrics and Statistics, 2024, vol. 0, issue 41, 109-117

Abstract: This study aims to investigate the impact of Environmental, Social, and Governance (ESG) scores on company performance in manufacturing companies using panel data analysis. The sample comprises data from sixteen companies listed in BIST Industrial Index (XUSIN) over the period 2018-2022. Two models were established in which ROA and Tobin’s Q ratios, selected as indicators of company performance, were used as dependent variables. In this context, the study investigated the impact of ESG scores on performance measures both in terms of the performance derived from the companies’ intra-period activities and reflected in their financial statements, as well as the stock market performance of their shares. The independent variables included in the models are ESG scores, company size (SIZE), leverage ratio (LEV), current ratio (CR), asset turnover ratio (ATO), interest coverage ratio (ICR), and revenue growth rate (RGR). Based on the findings in the analysis, the final models were estimated by using Driscoll Kraay (1998) standard error method. The study finds that ESG scores have a statistically significant positive impact on both ROA (significant at the 10% level) and Tobin’s Q (significant at the 5% level). This indicates that improvements in ESG performance can enhance both profitability (ROA) and stock market performance (Tobin’s Q) for companies.

Keywords: Global warming; climate change; carbon dioxide emissions; cluster analysis; k-means cluster analysis; hierarchical cluster analysiss (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ist:ekoist:v:0:y:2024:i:41:p:109-117

DOI: 10.26650/ekoist.2024.41.1540173

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