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How ESG shapes firm value: The mediating role of customer satisfaction

Author

Listed:
  • Seok, Junhee
  • Kim, Yanghee
  • Oh, Yun Kyung

Abstract

In contemporary business landscapes, concerns about environmental, social, and governance (ESG) issues are increasingly prominent. Despite the rising public interest in ESG, empirical research assessing its efficacy remains sparse. This research investigates the subtle connection between ESG initiatives and firm value, highlighting the mediating role of customer satisfaction. Utilizing an industry-fixed effects model, our research analyzes an unbalanced panel dataset comprising 168 firms over five years. We make three conclusions based on empirical analyses of a comprehensive secondary dataset. First, ESG performance improves a firm's value. Second, customer satisfaction positively mediates this relationship. Third, this relationship is noticeable in firms in environmentally sensitive industries. By distinctively focusing on ESG performance rather than broader CSR concepts, this research underscores the importance of customer satisfaction in determining how ESG performance influences firm value.

Suggested Citation

  • Seok, Junhee & Kim, Yanghee & Oh, Yun Kyung, 2024. "How ESG shapes firm value: The mediating role of customer satisfaction," Technological Forecasting and Social Change, Elsevier, vol. 208(C).
    • Handle: RePEc:eee:tefoso:v:208:y:2024:i:c:s0040162524005122
    DOI: 10.1016/j.techfore.2024.123714
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    More about this item

    Keywords

    ESG; Corporate social responsibility; Sustainability; Firm value; Customer satisfaction;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M30 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - General
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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