Environmental, Social, and Governance (ESG) Impact on Firm’s Performance

This research article aims to review the relationship between corporate environmental, social, and governance (ESG) disclosure and firm performance. The study looked at three aspects of a company’s performance: return on assets (ROA), return on equity (ROE), and Tobin’s Q. In addition, the goal of this study is to investigate how ESG and public disclosures of mismanagement to various stakeholders have influenced a company’s market valuation, which we use as one of the indicators of shareholder wealth. The findings also imply that governance-related issues lower market valuations more than environmental and social issues, with the latter two remaining value neutral throughout the study period. At the same time, the substantial gap between the minimum and maximum in the examined event windows suggests that the materiality of ESG problems remains a significant consideration.