An Empirical Research on the Impact of Environmentally Sensitive
Enterprises' ESG Performance on Corporate Value
Xinying Geng
Organization:School of Management, Wuhan University of Technology, 122 Luoshi Road, Wuhan, Hubei, China
Keywords: ESG Performance, Corporate Value, Fixed-Effects Model.
Abstract: This paper selects the data of 58 A-share listed power and heat companies in my country from 2015 to 2020
as a sample, and uses a fixed effect model to empirically study the relationship between ESG performance
and corporate value of environmentally sensitive companies. The results show that: ESG performance has a
significant negative impact on corporate value. The research in this paper helps to clarify the economic impact
of ESG performance of environmentally sensitive companies, and leads us to think more about how such
companies can better implement social governance practices. At the same time, it has certain reference value
for listed companies to attach importance to and improve ESG performance, and for regulatory authorities to
strengthen ESG system construction and supervision.
It is theoretically believed that high-quality
information disclosure will help resolve the
information asymmetry between company managers
and external capital providers, and also help
shareholders and creditors to make reasonable
decisions, and strengthen the internal supervision of
the company's "operating process". This reduces the
uncertainty risk of the enterprise. With the progress
of society, the scope of information required by
investors is gradually expanding, and the quality of
social responsibility indicators has also become a
criterion for judging whether a company is worth
investing in. ESG performance is a value evaluation
concept that integrates the three dimensions of
environment, society and governance. It is an
extension and enrichment of the concept of green
investment and responsible investment. It is also an
important standard for the international community to
measure the level of green and sustainable
development of enterprises.
This paper takes the data of A-share electric and
thermal listed companies from 2015 to 2020 as a
sample, and empirically analyzes the impact
mechanism of each listed company's ESG
performance on its corporate value, so as to provide a
certain reference for market investors to help
investors make value investments and promote
companies to recognize the relationship between
ESG and their corporate values, so as to pay attention
to their business philosophy and their own sustainable
At present, some scholars have done some research
on whether there is a correlation between ESG
performance and corporate value, and they have
reached different conclusions. The question of the
relationship between ESG performance and corporate
value remains open for further discussion.
Ghoul et al. (2017) found that in areas with
imperfect market institutions, ESG performance has
a significant positive correlation with firm value. Shi
Yichen (2018) found that companies with better ESG
performance usually have higher P/B and P/E ratios.
Zhang Lin and Zhao Haitao (2019) believe that ESG
performance has a significant positive impact on
corporate value. He Linglan (2020) took my country's
A-share financial industry listed companies from
2014 to 2018 as a research sample, and empirically
tested the positive correlation between ESG and
corporate value from the dynamic perspective of the
enterprise life cycle stage. However, some scholars
have put forward different conclusions. Brammer and
Geng, X.
An Empirical Research on the Impact of Environmentally Sensitive Enterprises’ ESG Performance on Corporate Value.
DOI: 10.5220/0011185500003440
In Proceedings of the International Conference on Big Data Economy and Digital Management (BDEDM 2022), pages 460-465
ISBN: 978-989-758-593-7
2022 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
Pav-elin (2006) found that companies with better
ESG performance have lower corporate value. Sassen
et al. (2016) examined the impact of environmental,
social and governance factors on corporate risk with
a sample of European companies, and found that
companies with better ESG performance had lower
corporate value. In addition, some scholars have
found that there is no significant relationship between
ESG performance and corporate value through
empirical research by taking listed companies in
Malaysia as a sample (Atan et al., 2018).
Different research conclusions from existing
studies may be due to differences in countries,
policies, data sources, etc., as well as differences in
ESG indicator evaluation systems adopted by
different scholars. At present, most of the foreign
studies take the developed country market as a
sample, and there are few studies on China, and the
domestic literature on the relationship between ESG
comprehensive performance and enterprise value is
relatively limited, and the peculiarities of
environmentally sensitive companies like electricity
and heat have also not been noted in previous
research. Therefore, this paper integrates corporate
environment, social responsibility and corporate
governance, and uses ESG ratings to explore the
impact of ESG performance of environmentally
sensitive listed companies on their corporate value.
3.1 Research Hypothesis
An enterprise is an economic organization for the
purpose of profit, and its financial status affects its
own development plan. At the same time, in order to
achieve their own long-term development,
enterprises must also fulfill their social and
environmental responsibilities. For this, enterprises
in different industries have different practices.
Chinese electric power and heat enterprises have their
own industry specificity. Under the background of
green development and sustainable development, in
order to actively undertake social responsibilities,
they need to invest more cost than ordinary industries,
and it is difficult to predict that such efforts can be
transformed into economic effects. Therefore, based
on theoretical analysis and the current economic
environment, this paper proposes the following
hypothesis: The higher ESG performance of
environmentally sensitive companies is not
conducive to the improvement of corporate value.
3.2 Sample Selection and Data Sources
This paper uses the data of A-share listed electric
power and heat companies from 2015 to 2020 as the
analysis sample, and collects the data of 83 A-share
listed electric power and heat companies for 6
consecutive years, and then excludes the listed
companies that were listed by ST during the sample
period and companies with missing financial data,
and finally obtained the effective observation value
of 58 listed companies of electric power and heat. The
data of each listed company comes from the CSMAR
database. After comprehensively considering the
reference value, this paper selects the ESG rating data
of China Securities to examine the three aspects of
environmental performance (E), social responsibility
(S) and corporate governance (G) of listed companies
in the sample.
3.3 Model Setting and Variable
3.3.1 Variable Definition
Explained Variable. Tobin's Q is the ratio of the
market value of a firm's stock to the firm's total
replacement assets. Tobin's Q = (market value of
tradable shares at the end of the year + market
value of non-tradable shares at the end of the
year + market value of net liabilities at the end
of the year) / total assets at the end of the year.
Value of non-tradable shares = net assets per
share × number of non-tradable shares. Net debt
market value = total liabilities - employee
compensation payable - taxes payable -
dividends payable - other payables - deferred tax
liabilities. This ratio reflects investors'
expectations of the company's future
profitability by estimating the company's
comprehensive capabilities in terms of operation
and profitability in the future, and is a measure
of the company's market value.
In order to verify the robustness of the impact of
ESG on corporate value,this paper selects the price-
to-book ratio of listed companies as the second
measure of corporate value (PB value = price per
share/net assets per share), and conducts robustness
tests on the regression results.
An Empirical Research on the Impact of Environmentally Sensitive Enterprises’ ESG Performance on Corporate Value
Table 1: Definition of Control Variables.
Variable name Variable Code Variable definition Data Source
Cash to total assets ratio cf
net cash flow from operating
activities/total assets at the end of the
Asset-liability ratio lev total liabilities/total assets CSMAR
Company growth
(total assets at the end of the year - total
assets at the beginning of the year)/total
assets at the beginning of the year
Equity concentration top3
sum of shareholding ratios of the top
three major shareholders
Return on equity roe net profit/average shareholders' equity CSMAR
Market capitalization cap
natural logarithm of market
Table 2: Descriptive Statistics of Variables.
Variable Obs Mean Std. Dev. Min Max
lntobinq 348 0.2419 0.4419 -0.2683 3.7565
lnesg 348 1.9546 0.1783 1.0986 2.1972
lncf 348 -2.8677 0.9681 -6.0696 -0.5944
lnlev 348 -0.6514 0.5635 -4.3380 -0.0093
lnTop3 348 -0.6877 0.4516 -5.1765 -0.1207
lncap 348 23.8507 1.2934 21.5219 27.1004
growth 348 0.0899 0.2526 -0.4628 2.7891
roe 348 0.0487 0.1763 -1.8293 0.9831
Explanatory Variable. The core explanatory
variables are the ESG evaluation data of China
Securities. Huazheng ESG evaluation system is based
on the core connotation and development experience
of ESG, combined with the actual situation of the
domestic market, and builds a three-level indicator
system from top to bottom, including 3 first-level
indicators, 14 second-level indicators, and 26 third-
level indicators. and more than 130 underlying data
indicators. Compared with overseas markets, more
indicators that are in line with the current domestic
development stage have been incorporated.
Control Variables. In terms of control variables,
factors such as the company's growth ability and the
company's debt ratio will have an impact on the
company's value. This paper introduces cash to total
assets ratio (cf), asset-liability ratio (lev), company
growth capability (growth), equity concentration
(top3), return on equity (roe), and market
capitalization (cap) as control variables. The main
variable names, codes and calculation methods are
shown in Table 1.
3.3.2 Model
In order to study the impact of the ESG performance
of each listed company in the sample on the enterprise
value, according to the variable settings above, the
following measurement model is constructed as
shown in formula (1).
This model is a static panel model. Among them,
represents individual heterogeneity, and
is the
perturbation term that varies with individuals and
time. In this paper, the panel regression method is used
to study the influence of esg on tobinq. In the process
of research, in order to exclude the influence of
heteroscedasticity, this paper takes the logarithm of
some data.
BDEDM 2022 - The International Conference on Big Data Economy and Digital Management
4.1 Descriptive Statistical Analysis of
As shown in Table 2, from the descriptive statistics
of the variables, the minimum value of lntobinq is -
0.2683 and the maximum value is 3.7565, indicating
that the value performance of listed companies varies
greatly among the observed values, but the difference
in the logarithm of the total market value is relatively
small. The average ESG score of all samples is about
7.06 (ln7.061.9546), and the maximum value is 9
(ln92.1972), indicating that the ESG performance
of the listed companies in the sample is generally
better. The average logarithm of the enterprise market
value is 23.8507, and the size of the sample
enterprises is not very different; the logarithm of the
enterprise's asset-liability ratio is -0.6514, and the
logarithm of the ratio of cash to total assets is -2.8677.
The maximum growth rate of enterprises is 278.91%,
and the minimum value is -46.28%. The growth
ability of different enterprises varies greatly.
4.2 Correlation Analysis
In order to test the scientificity and rationality of
variable selection, correlation analysis was carried
out on the variables. From Table 3, it can be seen that
there is a negative correlation between lntobinq and
lnesg; the higher the asset-liability ratio, that is, the
higher the financial risk faced by the enterprise, will
significantly reduce the enterprise value. The results
of correlation analysis between variables show that
the variables selected in this paper are appropriate.
4.3 Regression Analysis
Using stata15 for panel regression, a random-effects
model and a fixed-effects model were established, as
shown in Table 4. The Hausman test was carried out,
and the test results were as follows: the test statistic
was 69.75, and the corresponding p value was 0.000,
which was less than 0.05. Therefore, the fixed effect
model was used for regression analysis in this paper.
It can be seen from the fixed effect model in Table
4 that esg is significant at the significance level of
0.05, indicating that esg has an impact on tobinq.
Since the coefficient of lnesg is less than 0, esg has a
negative impact on tobinq. It can be seen from the
model that esg increases by 1%, and tobinq decreases
by 0.2855%.
01 1223 34 45 56 677
ln ln ln ln ln op3 ln growth
it t t t t t t t it
tobinq esg cf lev T cap roe
ββ β β β β β β
=+ + + + + + + +
Table 3: Correlation Analysis.
lntobinq lnesg lncf lnlev growth lnTop3 lncap
lntobinq 1
lnesg -0.266*** 1
lncf 0.283*** -0.047 1
lnlev -0.347*** 0.208*** -0.241*** 1
growth 0.091* 0.018 0.296*** 0.019 1
lnTop3 -0.413*** 0.354*** -0.051 0.328*** -0.033 1
lncap -0.416*** 0.408*** -0.342*** 0.272*** -0.057 0.423*** 1
roe -0.071 0.157*** 0.095* -0.112** 0.139*** 0.188*** 0.175***
Table 4: Panel Regression.
(1) (2) 3
VARIABLES Re Fe Robust_ Test
lnesg -0.2875** -0.2855** -0.5715**
(-2.129) (-2.135) (-2.013)
lncf 0.1141*** 0.0988*** 0.1951***
(4.412) (3.798) (3.535)
lnlev -0.2229*** -0.3495*** 0.1648
(-4.046) (-4.910) (1.091)
lnTop3 -0.4250*** -0.4815*** -0.2300
(-6.309) (-5.600) (-1.260)
An Empirical Research on the Impact of Environmentally Sensitive Enterprises’ ESG Performance on Corporate Value
lncap 0.1043*** 0.4878*** 0.3507***
(3.261) (9.121) (3.089)
growth -0.1040* -0.1765*** -0.0267
(-1.718) (-3.167) (-0.226)
roe -0.1045 -0.1617** -0.9641***
(-1.172) (-1.974) (-5.544)
Constant -1.7803** -11.0859*** -6.2133**
(-2.280) (-8.586) (-2.267)
Observations 348 348 348
R-squared 0.333 0.161
Number of id1 58 58 58
*** p<0.01, ** p<0.05, * p<0.1
4.4 Robustness Test
In order to further verify the reliability of the research
results and examine the stability of the model, this
paper conducts the following robustness test: use the
price-to-book ratio (PB value) instead of tobinq to
test the model. The results of regression using the
fixed effects model are shown in the last column
Robust_Test (robustness test model) in Table 4. It can
be seen from the test results that the original model is
robust, and ESG still has a significant negative impact
on enterprise value, indicating that the ESG
performance of environmentally sensitive companies
is different from other industries, and further
attention needs to be paid.
We hope This paper takes 58 A-share listed electric
and thermal power companies from 2015 to 2020 as
a sample to empirically test the impact of ESG
performance of environmentally sensitive listed
companies on corporate value. The study found that
ESG performance is negatively correlated with
corporate value, which is different from the current
mainstream views. The reason may be that as green
development and sustainable development gradually
become the mainstream of social development, the
state has imposed stricter environmental regulations
on high-polluting companies. In this context, such
enterprises carry out business transformation and
upgrading, and actively undertake social
responsibilities. On the one hand, they have invested
more costs than ordinary industries, and on the other
hand, stakeholders such as the public and society are
not sensitive to the positive signals of such industries,
so it is difficult to convert ESG impact effects into
economic effects. Based on the research conclusions,
this paper puts forward the following suggestions:
Enterprises should dialectically look at ESG
performance when carrying out social governance
practices, especially environmentally sensitive
enterprises should carefully analyze their ESG scores,
think deeply about how to better assume social
responsibilities and strive to improve themselves The
government and other regulatory authorities should
strengthen the supervision of the quality of ESG
information disclosure, and it is necessary to build a
complete ESG indicator system to regulate and guide.
However, the research method of this paper cannot
fully control other potential biases, and further
research is needed on the relationship between
corporate social governance practices and corporate
Atan R, Alam M M, Said J, et al. The Impacts of
Environmental, Social, and Governance Factors on
Firm Performance: Panel Study of Malaysian
Companies[J]. Man agement of Environmental Quality,
2018, 29 (2): 182-194
Brammer S, Pavelin S. Voluntary Environmental
Disclosures by Large UK Companies[J]. Journal of
Business Finance and Accounting ,2006,33:1168-1188.
Ghoul S E, Guedhami O, Kim Y. Country-Level.
Institutions, Firm Value, and the Role of Corporate
Social Responsibility Initiatives[J]. Journal of
International Business Studies,201 7,48(3) :360-385.
He Linglan. Research on the correlation between ESG and
enterprise value based on enterprise life cycle [D].
Hefei University of Technology, 2020.
Sassen R, Hinze A K, Hardeck I. Impact of ESG Factors on
Firm Risk in Europe[J]. Journal of Business
Economics, 2016, 86( 8) :867-904.
Sun Dong, Yang Shuo, Zhao Yuxuan, & Yuan Jiahai.
(2019). Research on the correlation between ESG
performance, financial status and systemic risk: A case
study of Shanghai and Shenzhen A-share listed power
companies. Environmental Management in China, Vol.
11, (2), 37-43.
BDEDM 2022 - The International Conference on Big Data Economy and Digital Management
Tong Jia. ESG Performance, Financing Constraints and
Enterprise Value Analysis [J]. Business News,
2021(29): 89-91.
Zhang Lin, Zhao Haitao. Does corporate environmental,
social and corporate governance (ESG) performance
affect corporate value? ——An empirical study based
on A-share listed companies [J]. Wuhan Finance,
An Empirical Research on the Impact of Environmentally Sensitive Enterprises’ ESG Performance on Corporate Value