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Does ESG have an impact on stock performance? A panel study of Indian companies

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  • Singh, Sachin
  • Singh, Bhanu Pratap

Abstract

The present study investigates the impact of environmental, social, and governance (ESG) on firms' profitability in the Indian setting on a sample of 23 firms from 2015 to 2020. The bootstrap corrected fixed effects estimation and inference in the dynamic panel method is employed to investigate the relationship. The dynamic panel results show that the relationship between ESG score and firms' profitability is inconclusive in the short run. However, governance conditions affect firms' investment decisions and the nexus between ESG and firm financial performance in the long run. Therefore, institutional reforms are warranted to stabilize property rights and check parent-client politics for the long-run effects of sustainable environmental governance on firms' profitability.

Suggested Citation

  • Singh, Sachin & Singh, Bhanu Pratap, 2024. "Does ESG have an impact on stock performance? A panel study of Indian companies," MPRA Paper 120704, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:120704
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    References listed on IDEAS

    as
    1. Nazliatul Aniza Abdul Aziz & Norlida Abdul Manab & Siti Norezam Othman, 2015. "Exploring the Perspectives of Corporate Governance and Theories on Sustainability Risk Management (SRM)," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(10), pages 1148-1158.
    2. Ali Alshehhi & Haitham Nobanee & Nilesh Khare, 2018. "The Impact of Sustainability Practices on Corporate Financial Performance: Literature Trends and Future Research Potential," Sustainability, MDPI, vol. 10(2), pages 1-25, February.
    3. Nazliatul Aniza Abdul Aziz & Norlida Abdul Manab & Siti Norezam Othman, 2015. "Exploring the Perspectives of Corporate Governance and Theories on Sustainability Risk Management (SRM)," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(10), pages 1148-1158, October.
    4. Isabel Lourenço & Manuel Branco & José Curto & Teresa Eugénio, 2012. "How Does the Market Value Corporate Sustainability Performance?," Journal of Business Ethics, Springer, vol. 108(4), pages 417-428, July.
    5. Tracy Artiach & Darren Lee & David Nelson & Julie Walker, 2010. "The determinants of corporate sustainability performance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 50(1), pages 31-51, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    ESG scores; Indian firms; firms' profitability; dynamic panel;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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