Thesis Public Defense | VNP26 - Trần Thị Thanh Thảo

The role of environment, social and governance performance in enhancing firm performance: The US case

Student: Trần Thị Thanh Thảo, VNP26

Supervisor: Dr. Vũ Thị Hồng Nhung

Abstract:

Environmental, social, and corporate governance (ESG) are rapidly guiding principles for business success. However, the major of previous researches just focused on examining one of three dimensions of ESG. In this research, we take account of 297 firms with 1782 observations in the US’s S&P 500 list from 2015 to 2020 to investigate the influence of overall ESG and specific ESG dimensions on firm performance by using dynamic panel data techniques (System GMM model). Further analysis examines the interaction effect of environmentally sensitive sectors on the connection between ESG and Firm performance. Our empirical results reveal that companies with excellent ESG performance as a whole and its three components, including environmental, social, and governance performance ratings, have a positive effect on accounting-based financial performance (ROA). Moreover, the regression results indicate that the companies operating in sectors that affect the environment usually negatively impact the firm operation. Finally, we provide some proposals on the future direction of government building and sustainable growth of firms.

Keywords: ESG, firm performance, ROA, System GMM, environmentally sensitive industries