Does Sustainability Matters for Firm Value: Evidence from China
Subject Areas : Business ManagementAghila Sasidharan 1 , Manav Duggal 2
1 - Kilakkath house,Nirmalagiri (p.o)
Kannur, Kerala
2 - Student, Jindal Global Law School
O.P Jindal Global University
Sonipat, Haryana, India, 131029
Keywords: ESG, Firm Value, Shareholders theory, China,
Abstract :
This study aims to examine the impact of environmental social and governance (ESG) on firm value using a sample of firms listed in China. Using fixed effect panel regression analysis on a sample of firms listed on the Shanghai stock exchange of China, we find that ESG has a positive impact on firm value consistent with shareholders theory. This approach highlights the value-enhancing potential of sustainability initiatives for all stakeholders, including shareholders. Future studies should examine the influence of ESG ratings on a broader scale, for as, by including small and medium-sized firms (SMEs) in the sample.Our findings provide implications for practitioner’s regulators and policy makers. Our study contributes to the existing literature on sustainability by focusing more on ESG in concentrated ownership country like China. Overall our findings confirm that sustainability reports carry information that is helpful for firm valuation and firms benefit from disclosing ESG activities by receiving higher tax benefits and having the potential to increase their loan capacity.