Perspectives of ESG performance – A study of ESG performance effect on firm value in the U.S

Sammanfattning: Seminar date: 2019-06-03 Course: BUSN79, Degree project in Accounting & Finance, Graduate level, 15 ECTS-credits Authors: Daniel Asgodom (940417), Jakob Ericsson (920323) Supervisor: Håkan Jankensgård Examinator: Reda M Moursli Purpose: This study aims to test the relationship between ESG performance and firm value using a different methodology when compared to previous US studies. Additionally, the time effects of ESG as well as the differences between the ESG-firm value between controversial and conventional stocks would be assessed. Methodology: The study is based on the positivism and deductive approach that are used to test several hypothesizes posed by this study. Furthermore empirical models such as the use of OLS regressions and fixed effects model have been used to derive the results. Theoretical Perspectives: The theoretical backbone of this study is the shareholder and stakeholder theories used to explain the benefits and drawbacks of CSR. Additionally, legitimacy theory is used to explain firm’s motives for pursuing ESG activities whilst other studies such as errors-in-expectations and shunned stock hypothesis look to explain the possible results that can be achieved in this study. Empirical Foundation: This study uses the S&P 500 as a sample across a period of 15 years. ESG and financial data was collected from Thomson Reuters. Conclusions: The study found an insignificant result between ESG and firm value based on the methodology used. This meant that this study could not prove whether ESG performance affected firm value over time and whether the ESG-firm value relationship varies between controversial firms and conventional firms.