The Effect of Corporate Environmental, Social and Governance Performance on Corporate Market Value

Jiahui Li

doi:10.54097/r3tc5d02

Authors

Jiahui Li School of Economics and Management, China University of Geosciences, Wuhan, China

DOI:

https://doi.org/10.54097/r3tc5d02

Keywords:

Corporate ESG performance, market capitalization, research and development investment.

Abstract

Corporate Environmental, Social and Governance (ESG) performance is increasingly becoming a core variable influencing its long-term market value. This study examines the effects of corporate ESG in general and its sub-dimensions of Environment, Society, and Governance on Tobin's Q using a sample of A-share listed businesses from 2019 to 2024. Further explores its mechanism of action by using the proportion of Research and Development(R&D) investment as a mediating variable. The results show a considerable positive correlation between Tobin's Q and the overall ESG performance of businesses; the contributions of the Environment (E) and Governance (G) dimensions are positive, while the Society (S) dimension is negative; ESG indirectly enhances corporate valuation by encouraging innovation investment. The robustness results show that using PB as a substitute for Tobin's Q maintains the same conclusion but reduces significance; using PE as a substitute has lower explanatory power. Finally, based on the research conclusions, this paper provides suggestions for A-share listed companies, investors, and regulatory authorities for reference.

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