How Does ESG Performance Affect Earnings? A Meta-Analysis
| Název práce v češtině: | Jak ESG výkonnost ovlivňuje ziskovost? Meta-analýza |
|---|---|
| Název v anglickém jazyce: | How Does ESG Performance Affect Earnings? A Meta-Analysis |
| Klíčová slova: | ESG, ROA, ROE, corporate financial performance, meta-analysis |
| Klíčová slova anglicky: | ESG, ROA, ROE, corporate financial performance, meta-analysis |
| Akademický rok vypsání: | 2023/2024 |
| Typ práce: | bakalářská práce |
| Jazyk práce: | angličtina |
| Ústav: | Institut ekonomických studií (23-IES) |
| Vedoucí / školitel: | prof. PhDr. Tomáš Havránek, Ph.D. |
| Řešitel: | skrytý - zadáno vedoucím/školitelem |
| Datum přihlášení: | 03.04.2024 |
| Datum zadání: | 03.04.2024 |
| Datum a čas obhajoby: | 08.09.2025 09:00 |
| Místo konání obhajoby: | Opletalova, O105, místnost č. 105 |
| Datum odevzdání elektronické podoby: | 28.07.2025 |
| Datum proběhlé obhajoby: | 08.09.2025 |
| Oponenti: | Mgr. Nicolas Fanta |
| Seznam odborné literatury |
| 1. Whelan, T., Atz, U., Van Holt, T., & Clark, C. (2021). ESG and financial performance: Uncovering the relationship
by aggregating evidence from 1,000 plus studies published between 2015-2020. New York: NYU STERN Center for sustainable business, 520-536. 2. Irsova, Z., Doucouliagos, H., Havranek, T., & Stanley, T. D. (2023). Meta‐analysis of social science research: A practitioner's guide. Journal of Economic Surveys. 3. Sinha Ray, R., & Goel, S. (2023). Impact of ESG score on financial performance of Indian firms: static and dynamic panel regression analyses. Applied Economics, 55(15), 1742-1755. 4. Mardini, G. H. (2022). ESG factors and corporate financial performance. International Journal of Managerial and Financial Accounting, 14(3), 247-264. 5. Gao, Y., & Han, K. S. (2022). Managerial overconfidence, CSR and firm value. Asia-Pacific journal of accounting & economics, 29(6), 1600-1618. 6. Garcia, A. S., & Orsato, R. J. (2020). Testing the institutional difference hypothesis: A study about environmental, social, governance, and financial performance. Business Strategy and the Environment, 29(8), 3261-3272. 7. Fu, T., & Li, J. (2023). An empirical analysis of the impact of ESG on financial performance: the moderating role of digital transformation. Frontiers in Environmental Science, 11, 1256052. |
| Předběžná náplň práce |
| Research question and motivation
The relationship between Environmental, Social, and Governance (ESG) criteria and corporate financial performance (CFP) has become a prominent topic in contemporary business and finance research. The key research question for this thesis is: "How do ESG criteria affect corporate financial performance from the perspective of ROA and ROE?" This question is crucial as ESG factors are increasingly considered in corporate decision-making, influenced by regulatory developments and investor preferences. The importance of ESG is expected to grow, and understanding its financial implications is vital for stakeholders, including investors, managers, and policymakers. The importance of the relationship between financial performance and ESG has been discussed extensively in the academic literature. One of the hypotheses is that company investment in environmental and social responsibility may consume the resources and therefore result in financial expenses that weaken a firm's competitiveness (Garcia and Orsato, 2020). Some authors suggest that by creating a green, environmentally friendly corporate image through taking a long-term view of corporate development and not pursuing short-term benefits for immediate profit, companies may obtain long-term returns (Gao and Han, 2020). Some new studies suggest that the positive effect of ESG on financial performance might be promoted by modern technologies (Fu and Li, 2023) Despite the large number of studies on the impact of ESG on financial performance, no meta-analysis has been conducted on this topic using the latest methods used in this area. (Havranek, Irsova, & Zeynalova, 2021). The recent meta-analysis did not employ the most advanced scientific methods in evaluating the ESG-financial performance relationship (Whelan, Atz, Van Holt, & Clark, 2021). In addition, this is a meta-analysis from 2021 and no new meta-analysis has been done on this topic since then, while new studies have emerged since then that focus on the relationship between ESG and corporate financial performance. Contribution This thesis will contribute to the literature by providing a comprehensive meta-analysis of the relationship between ESG criteria and corporate financial performance from the perspective of ROE and ROA, incorporating recent studies and advanced research methods (new methods to handle publication bias and p-hacking and to treat systematic heterogeneity and model uncertainty). The meta-analysis will explore potential sources of heterogeneity, such as geographical regions, industry sectors, and methodological differences. This analysis will help stakeholders understand the conditions under which ESG impacts financial performance positively, negatively, or not at all. The findings can inform corporate strategies, investment decisions, and regulatory policies. Methodology The thesis will use meta-analysis to examine the relationship between ESG and corporate financial performance. The methodology involves several steps: 1. Literature Search: Using Google Scholar and other databases, we will identify relevant studies on ESG and financial performance, focusing on the most recent and rigorous research. 2. Inclusion Criteria: Studies must report empirical estimates of the relationship between ESG and financial performance (ROA, ROE), with measures of precision (e.g., standard errors). 3. Data Extraction: We will extract estimates, standard errors, and relevant study characteristics (e.g., methodology, sample size, region) from the included studies. 4. Assessment of publication bias and p-hacking: We will conduct visual inspection using funnel plot asymmetry tests and statistical corrections using methods like PET-PEESE, endogenous kink, and selection models 5. Addressing Heterogeneity: We will conduct meta-regression analysis using multiple models to explore and explain the heterogeneity among study results and utilize Bayesian model averaging to deal with model uncertainty and potential collinearity among moderators. 6. Reporting: We will report conditional means of effect sizes for different contexts based on the meta-regression results. Provide comprehensive transparency by sharing all data and code used in the analysis. Outline 1. Abstract 2. Introduction ○ Background and motivation ○ Research question ○ Literature overview ○ Contribution 3. Constructing the data set ○ Literature search ○ Variable selection ○ Primary analysis 4. Publication bias ○ Funnel plot ○ Linear tests for selective reporting ○ Non-linear tests for selective reporting 5. Heterogeneity ○ Overall results 6. Final remarks ○ The Best-practice estimate ○ Economic significance 7. Conclusion ○ Summary of findings 8. Bibliography |
| Předběžná náplň práce v anglickém jazyce |
| Research question and motivation
The relationship between Environmental, Social, and Governance (ESG) criteria and corporate financial performance (CFP) has become a prominent topic in contemporary business and finance research. The key research question for this thesis is: "How do ESG criteria affect corporate financial performance from the perspective of ROA and ROE?" This question is crucial as ESG factors are increasingly considered in corporate decision-making, influenced by regulatory developments and investor preferences. The importance of ESG is expected to grow, and understanding its financial implications is vital for stakeholders, including investors, managers, and policymakers. The importance of the relationship between financial performance and ESG has been discussed extensively in the academic literature. One of the hypotheses is that company investment in environmental and social responsibility may consume the resources and therefore result in financial expenses that weaken a firm's competitiveness (Garcia and Orsato, 2020). Some authors suggest that by creating a green, environmentally friendly corporate image through taking a long-term view of corporate development and not pursuing short-term benefits for immediate profit, companies may obtain long-term returns (Gao and Han, 2020). Some new studies suggest that the positive effect of ESG on financial performance might be promoted by modern technologies (Fu and Li, 2023) Despite the large number of studies on the impact of ESG on financial performance, no meta-analysis has been conducted on this topic using the latest methods used in this area. (Havranek, Irsova, & Zeynalova, 2021). The recent meta-analysis did not employ the most advanced scientific methods in evaluating the ESG-financial performance relationship (Whelan, Atz, Van Holt, & Clark, 2021). In addition, this is a meta-analysis from 2021 and no new meta-analysis has been done on this topic since then, while new studies have emerged since then that focus on the relationship between ESG and corporate financial performance. Contribution This thesis will contribute to the literature by providing a comprehensive meta-analysis of the relationship between ESG criteria and corporate financial performance from the perspective of ROE and ROA, incorporating recent studies and advanced research methods (new methods to handle publication bias and p-hacking and to treat systematic heterogeneity and model uncertainty). The meta-analysis will explore potential sources of heterogeneity, such as geographical regions, industry sectors, and methodological differences. This analysis will help stakeholders understand the conditions under which ESG impacts financial performance positively, negatively, or not at all. The findings can inform corporate strategies, investment decisions, and regulatory policies. Methodology The thesis will use meta-analysis to examine the relationship between ESG and corporate financial performance. The methodology involves several steps: 1. Literature Search: Using Google Scholar and other databases, we will identify relevant studies on ESG and financial performance, focusing on the most recent and rigorous research. 2. Inclusion Criteria: Studies must report empirical estimates of the relationship between ESG and financial performance (ROA, ROE), with measures of precision (e.g., standard errors). 3. Data Extraction: We will extract estimates, standard errors, and relevant study characteristics (e.g., methodology, sample size, region) from the included studies. 4. Assessment of publication bias and p-hacking: We will conduct visual inspection using funnel plot asymmetry tests and statistical corrections using methods like PET-PEESE, endogenous kink, and selection models 5. Addressing Heterogeneity: We will conduct meta-regression analysis using multiple models to explore and explain the heterogeneity among study results and utilize Bayesian model averaging to deal with model uncertainty and potential collinearity among moderators. 6. Reporting: We will report conditional means of effect sizes for different contexts based on the meta-regression results. Provide comprehensive transparency by sharing all data and code used in the analysis. Outline 1. Abstract 2. Introduction ○ Background and motivation ○ Research question ○ Literature overview ○ Contribution 3. Constructing the data set ○ Literature search ○ Variable selection ○ Primary analysis 4. Publication bias ○ Funnel plot ○ Linear tests for selective reporting ○ Non-linear tests for selective reporting 5. Heterogeneity ○ Overall results 6. Final remarks ○ The Best-practice estimate ○ Economic significance 7. Conclusion ○ Summary of findings 8. Bibliography |