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- Dokumenttyp:
- Masterarbeit
- Autor(en):
- Thesis
- Titel:
- Impact of Environmental, Social and Governance (ESG) on the Performance of Real Estate Listed Firms
- Abstract:
- Purpose: Throughout our Master Thesis, we investigate whether there is a causal relationship between ESG ratings and the operational (Return on Assets ROA), financial (Return on Equity ROE) and market performance (Tobin’s Q ratio) of Real Estate listed companies (REITs), and whether this relationship is positive, negative or even neutral. Design/methodology/approach: Using the Bloomberg Professional database on several Environmental, Social & Governance ESG dimensions in the 2014-2020 period, our study sample covers 209 listed real estate companies, from 31 different countries, during the period between 2014 and 2020. Panel regression analysis was used to examine the study hypotheses and to achieve the study aims. We used first the Ordinary Least Squares approach with different specifications to isolate the intact effect of ESG on FP. Moreover, and for robustness purposes we developed a Two-Stage Least squares model to ensure that our results are consistent. The market performance Tobin’s Q, is our FP measure of interest, owing to the fact that, we focused our study on listed companies. ROA and ROE were used for comparison purposes, but most important, also to avoid generalizing the relationship between ESG and FP, based on a single FP metric. Therefore, we will be specifying this relationship by mentioning whether we are considering the operational, the financial or the market performance of a company. Added Value: The study contributes to ESG prior literature in three dimensions. First, regarding the relationship between ESG and financial performance of listed companies, this study represents one of the very few quantitative empirical studies of the real estate sector, and the first study to examine the impact of ESG Bloomberg ratings on FP for Real Estate listed companies from 2014 to 2020. Second, this research tested the impact of the ESG score (overall weighted ESG score) and its sub-components (E, S and G score) on Financial Performance to identify the main driver affecting Real Estate listed companies’ performance. Lastly, the outcomes will help scholars, firms’ shareholders, decision makers, regulators, policymakers improve their consciousness of ESG’s strategies incorporation. Findings: The results indicate a positive relationship between the overall weighted ESG Score and firms’ market performance Tobin’s Q. Likewise, measuring ESG sub-components separately showed that environmental (E Score) social (S Score), and governance (G Score) performances are positively associated with the Tobin’s Q. Consistently across all model specifications (OLS as well as TSLS models), high ESG ratings are associated with higher returns, at least in the studied period between 2014 and 2020. However, ESG overall score, as well as its sub-components when considered separately, are found to be negatively associated with ROA and ROE. This may be because firms engaged in more socially responsible practices suffer from more financial costs and thus have lower operational and financial performance. Where in the other hand, the stock market appreciates any decent investment in ESG, by overvaluing the corresponding companies.
- Stichworte:
- Environmental, social and governance (ESG), corporate financial performance (CFP), financial performance (FP), socially responsible investments (SRI), impact investing, corporate social performance (CSP), corporate ESG performance (CESGP)
- Betreuer:
- Muckenhaupt, Jan
- Jahr:
- 2022
- Sprache:
- de
- Hochschule / Universität:
- Technische Universität München
- TUM Einrichtung:
- Professur für Immobilienentwicklung
- Status:
- Abgeschlossen
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