The impact of environmental, social and governance score on shareholder wealth: A new dimension in investment philosophy
Recently, there has been significant research on the environmental, social, and governance (ESG) aspects of wealth generation. Managers have tried to attract investors for sustainable growth by pushing for ESG investments. This study attempts to determine the relationship between ESG scores on share...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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Elsevier
2023-03-01
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| Series: | Cleaner and Responsible Consumption |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2666784323000025 |
| _version_ | 1797867610834993152 |
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| author | Abhishek Parikh Divya Kumari Maria Johann Dušan Mladenović |
| author_facet | Abhishek Parikh Divya Kumari Maria Johann Dušan Mladenović |
| author_sort | Abhishek Parikh |
| collection | DOAJ |
| description | Recently, there has been significant research on the environmental, social, and governance (ESG) aspects of wealth generation. Managers have tried to attract investors for sustainable growth by pushing for ESG investments. This study attempts to determine the relationship between ESG scores on shareholders' wealth and define possible selection criteria for future investments. Notably, there are funds and investment avenues that are specifically designed for ESG themes, urging toward sustainable wealth creation. However, investors' focus remains on their returns and wealth creation. In recent years, reporting ESG scores has become standard practice for most rating agencies to report the financial health of companies. Thus, this study employs a linear regression model to analyze the impact of ESG scores on the equity returns of 225 Indian companies. The results show empirical evidence of the positive impact of the governance (G) factor on equity returns, while it reports the negative impact of the environmental (E) factor on equity returns. Moreover, the impact of the social (S) factor is found to be insignificant. Therefore, we conclude that financial motivations may be needed to trigger E− and S- factor practices by companies. It is important for companies to be very conscious of their governance practices to improve their shareholders’ wealth. |
| first_indexed | 2024-04-09T23:42:54Z |
| format | Article |
| id | doaj.art-9e723df5c7b248448ca6e86234dde806 |
| institution | Directory Open Access Journal |
| issn | 2666-7843 |
| language | English |
| last_indexed | 2024-04-09T23:42:54Z |
| publishDate | 2023-03-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Cleaner and Responsible Consumption |
| spelling | doaj.art-9e723df5c7b248448ca6e86234dde8062023-03-18T04:43:01ZengElsevierCleaner and Responsible Consumption2666-78432023-03-018100101The impact of environmental, social and governance score on shareholder wealth: A new dimension in investment philosophyAbhishek Parikh0Divya Kumari1Maria Johann2Dušan Mladenović3Ganpat University, Faculty of Management Studies, VMPCMS, Ganpat Vidyanagar, 384012, India; Corresponding author.Ganpat University, Faculty of Management Studies, VMPCMS, Ganpat Vidyanagar, 384012, IndiaWarsaw School of Economics, al. Niepodległości 162, 02-554, Warszawa, PolandMasaryk University, Department of Corporate Economy, Faculty of Economics and Administration, Brno, Czech RepublicRecently, there has been significant research on the environmental, social, and governance (ESG) aspects of wealth generation. Managers have tried to attract investors for sustainable growth by pushing for ESG investments. This study attempts to determine the relationship between ESG scores on shareholders' wealth and define possible selection criteria for future investments. Notably, there are funds and investment avenues that are specifically designed for ESG themes, urging toward sustainable wealth creation. However, investors' focus remains on their returns and wealth creation. In recent years, reporting ESG scores has become standard practice for most rating agencies to report the financial health of companies. Thus, this study employs a linear regression model to analyze the impact of ESG scores on the equity returns of 225 Indian companies. The results show empirical evidence of the positive impact of the governance (G) factor on equity returns, while it reports the negative impact of the environmental (E) factor on equity returns. Moreover, the impact of the social (S) factor is found to be insignificant. Therefore, we conclude that financial motivations may be needed to trigger E− and S- factor practices by companies. It is important for companies to be very conscious of their governance practices to improve their shareholders’ wealth.http://www.sciencedirect.com/science/article/pii/S2666784323000025ESGSustainable investmentShareholder wealthReturnIndia |
| spellingShingle | Abhishek Parikh Divya Kumari Maria Johann Dušan Mladenović The impact of environmental, social and governance score on shareholder wealth: A new dimension in investment philosophy Cleaner and Responsible Consumption ESG Sustainable investment Shareholder wealth Return India |
| title | The impact of environmental, social and governance score on shareholder wealth: A new dimension in investment philosophy |
| title_full | The impact of environmental, social and governance score on shareholder wealth: A new dimension in investment philosophy |
| title_fullStr | The impact of environmental, social and governance score on shareholder wealth: A new dimension in investment philosophy |
| title_full_unstemmed | The impact of environmental, social and governance score on shareholder wealth: A new dimension in investment philosophy |
| title_short | The impact of environmental, social and governance score on shareholder wealth: A new dimension in investment philosophy |
| title_sort | impact of environmental social and governance score on shareholder wealth a new dimension in investment philosophy |
| topic | ESG Sustainable investment Shareholder wealth Return India |
| url | http://www.sciencedirect.com/science/article/pii/S2666784323000025 |
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