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The Influence of ESG Ratings on Financial Performance of Listed Companies in Developing Countries: A Case Study of China's Market

Ma, Yunjin LU and Mao, Hongyi LU (2024) NEKN02 20241
Department of Economics
Abstract
In this study, we use the Chinese market over the period 2012–2022 as a case to investigate the impact of environmental, social, and governance (ESG) ratings on the financial performance of publicly traded companies in developing countries. After measuring Return on Assets and Tobin’s Q as explanatory variables, we found a significant positive correlation between financial performance and ESG ratings. This indicates that firms with higher ESG ratings have better profitability and market valuation.
Further analyses show that social responsibility and corporate governance factors have a greater effect on financial performance than environmental factors. ESG ratings positively affect the financial performance of both non-state-owned and... (More)
In this study, we use the Chinese market over the period 2012–2022 as a case to investigate the impact of environmental, social, and governance (ESG) ratings on the financial performance of publicly traded companies in developing countries. After measuring Return on Assets and Tobin’s Q as explanatory variables, we found a significant positive correlation between financial performance and ESG ratings. This indicates that firms with higher ESG ratings have better profitability and market valuation.
Further analyses show that social responsibility and corporate governance factors have a greater effect on financial performance than environmental factors. ESG ratings positively affect the financial performance of both non-state-owned and state-owned firms, suggesting a growing emphasis on ESG factors in the Chinese market. (Less)
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author
Ma, Yunjin LU and Mao, Hongyi LU
supervisor
organization
course
NEKN02 20241
year
type
H1 - Master's Degree (One Year)
subject
keywords
ESG ratings, Financial Performance, China, Return on Assets, Panel Data Analysis, Fixed effect.
language
English
id
9156724
date added to LUP
2024-08-12 15:57:37
date last changed
2024-08-12 15:57:37
@misc{9156724,
  abstract     = {{In this study, we use the Chinese market over the period 2012–2022 as a case to investigate the impact of environmental, social, and governance (ESG) ratings on the financial performance of publicly traded companies in developing countries. After measuring Return on Assets and Tobin’s Q as explanatory variables, we found a significant positive correlation between financial performance and ESG ratings. This indicates that firms with higher ESG ratings have better profitability and market valuation.
Further analyses show that social responsibility and corporate governance factors have a greater effect on financial performance than environmental factors. ESG ratings positively affect the financial performance of both non-state-owned and state-owned firms, suggesting a growing emphasis on ESG factors in the Chinese market.}},
  author       = {{Ma, Yunjin and Mao, Hongyi}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Influence of ESG Ratings on Financial Performance of Listed Companies in Developing Countries: A Case Study of China's Market}},
  year         = {{2024}},
}