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The relationship between ESG and financial performance: Does size matter?
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2019 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

With an increased interest in sustainable investments, ESG measurements provide a quantitative overall view of how firms work with environmental, social and governance factors. Previous research indicates that having a strong ESG performance is beneficial to firms from the perspective of financial performance. This study aims to observe whether the positive relationship between valuation as measured by Tobin’s Q and profitability as measured by ROA holds true in the Nordic market. Furthermore, the study aims to observe whether this relationship is affected by a firm's size. Multiple OLS-regression has been used. The study is conducted on 560 firm-year observations from 2014 to 2018. The results of the study show that there exists a positive relationship between ESG activities and financial performance. The results also show that the relationship between ESG performance and valuation (Tobin’s Q) is negatively affected by the size of a firm, however the relationship between ESG performance and profitability (ROA) is not affected by the size of a firm.

Place, publisher, year, edition, pages
2019.
Keywords [en]
ESG performance, financial performance, firm size, CSR, stakeholder theory, shareholder theory
National Category
Business Administration
Identifiers
URN: urn:nbn:se:uu:diva-404122OAI: oai:DiVA.org:uu-404122DiVA, id: diva2:1392874
Subject / course
Business Studies
Educational program
Bachelor Programme in Business and Economics
Supervisors
Examiners
Available from: 2020-02-14 Created: 2020-02-13 Last updated: 2020-02-14Bibliographically approved

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  • apa
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  • nn-NB
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  • Other locale
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Output format
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  • asciidoc
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