How does sustainability performance affect firms' market performance? An empirical investigation in the Indian context

Gaurav Jyoti () and Ashu Khanna ()
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Gaurav Jyoti: Indian Institute of Technology
Ashu Khanna: Indian Institute of Technology

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2024, vol. 26, issue 8, No 54, 20457-20483

Abstract: Abstract This present study seeks to empirically examine the long-term impact and association between corporate sustainability performance by utilizing Environment, Social, and Governance (ESG) scores, and the stock market performance indicators of the firms listed on the National Stock Exchange (NSE) India. Panel data regression models have been developed to analyze time series and cross-sectional data for 169 mid- and large-cap firms having an average of 1500 firm-year observations across different industries. A separate examination of ESG scores reveals that the Environmental score is negatively associated with firms' market performance. The Social score is found statistically significant, having a positive association with the market performance indicators. The Governance score also has a negative relationship with the study sample's earnings per share and dividends per share. ESG combined score is positively associated with overall firms' market performance. The results of the study show both positive and negative effects of firms' sustainability on market performance. It will set the pace for academics and researchers in the field of corporate sustainability. The study will also help the business world and policymakers to figure out which components of sustainability offer businesses and stakeholders the most benefits and which elements need more attention.

Keywords: Sustainability performance; ESG scores; Market performance; Corporate social responsibility; Stakeholders; Corporate sustainability assessment (CSA); Sustainable development goals (SDGs) (search for similar items in EconPapers)
JEL-codes: G32 L1 M14 Q01 Q56 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10668-023-03482-9

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