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Impact of environmental, social and governance initiatives on firm value: Analysis using AI-based ESG scores for Japanese listed firms

Author

Listed:
  • Chen, Zhixiong
  • Sugiyama, Kohei
  • Tasaka, Kazuyuki
  • Kito, Tomomi
  • Yasuda, Yukihiro

Abstract

This paper is the first study to examine the relationship between ESG initiatives and firm value for almost all Japanese listed firms. By constructing our unique AI-based ESG (Environmental Social Governance) scores that have higher coverage than existing ESG scores, we score and analyze firms that have not previously been given ESG scores and provide more robust evidence for the impact of ESG initiatives on firm value. Our unique AI-based ESG scores are classified as ESG disclosure scores. We empirically show that Japanese listed firms engaging in ESG activities have a significantly higher Tobin’s Q and higher volatility. We use the COVID-19 pandemic to eliminate reverse causality in our analysis.

Suggested Citation

  • Chen, Zhixiong & Sugiyama, Kohei & Tasaka, Kazuyuki & Kito, Tomomi & Yasuda, Yukihiro, 2024. "Impact of environmental, social and governance initiatives on firm value: Analysis using AI-based ESG scores for Japanese listed firms," Research in International Business and Finance, Elsevier, vol. 70(PA).
    • Handle: RePEc:eee:riibaf:v:70:y:2024:i:pa:s0275531924000965
    DOI: 10.1016/j.ribaf.2024.102303
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    More about this item

    Keywords

    ESG scores; Natural language process; Tobin’s Q; COVID-19 pandemic;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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