The Effect of ESG Performance On Firm Value

Cheng Chi; Haohan Xu; Zixuan Yu

doi:10.54097/yehyaf26

Authors

Cheng Chi
Haohan Xu
Zixuan Yu

DOI:

https://doi.org/10.54097/yehyaf26

Keywords:

ESG performance; firm value; new energy automobile

Abstract

ESG is an acronym for Environmental, Social and Governance. Its goal is to evaluate the company's efforts to advance social and environmental benefits as well as the quality of corporate governance. Corporate ESG performance is highlighted in both Western and Chinese markets, which has a substantial impact on firm value. This paper selected NIO, a representative company of the Chinese new energy sources automobile industry as a research case to analyze the impacts of its ESG performance on firm value. ESG performance was proven to positively affect company share prices and to both reflect and affect a company's financial performance. Additionally, this report offered suggestions for improving NIO's ESG performance in terms of corporate governance and product quality. This research made a novel suggestion that the effect of ESG on business value depended not only on the firm's own ESG performance but also on the ESG performance of its rival companies.

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