INFLUENCE OF ESG FACTORS ON COMPANIES MARKET CAPITALIZATION

Iulian Dascalu (), Ioana Andrioaia () and Veronica Grosu ()
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Iulian Dascalu: Stefan cel Mare University of Suceava, 720229, Romania
Ioana Andrioaia: Stefan cel Mare University of Suceava, 720229, Romania
Veronica Grosu: Stefan cel Mare University of Suceava, 720229, Romania

European Journal of Accounting, Finance & Business, 2024, vol. 12, issue 3, 96-102

Abstract: This study examines how environmental, social, and governance (ESG) performance correlates with market capitalization among companies listed on NASDAQ stock market. Drawing on a dataset of 200 companies, split evenly between the highest and lowest ESG performers from a Newsweek ranking, the research investigates whether robust ESG practices translate into superior market valuations. The method used was an econometric technique applied in SPSS, incorporating descriptive statistics, correlation tests, and a log-log (power) regression model to capture the potential non-linear relationship between ESG scores and market value. The ESG data, sourced and processed from publicly available rankings, is integrated with market capitalization figures retrieved from recognized financial platforms. The results provide evidence of a statistically significant relationship, suggesting that higher ESG scores may have a positive impact on a company's market capitalization. Furthermore, industries such as technology and financial services, which often emphasize sustainability and governance, emerged as leading examples where strong ESG policies align with a higher market value.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:scm:ejafbu:v:12:y:2024:i:3:p:96-102

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