“Evaluating the Impact of Environmental, Social, and Governance Factors on Firm Value and Firm Performance”

Abstract

This paper evaluates the effect of individual ESG factors on Firm Value and Firm Performance. ESG-compliant companies are sustainable in the long term since they are seen as more resilient, ethical, and better positioned for long-term success. We find that Social and Governance Performance effect the Firm Performance negatively, while the Environmental Performance has an insignificant impact. This research has evaluated the effect of each of the ESG factors, while most of the previous studies focus the ESG’s combined effect. This study is limited in the aspect that it only looks at the mediation impact between individual scores and Firm Value while combined ESG is not explored here which may give different results. Future researchers can incorporate the combined ESG Performance and investigate how mediation of Firm Performance interacts with total score and Firm Value.