This research paper examines the relation between the Environmental, Social and Governance (ESG) factors and the financial performance of the company. We have included the Return on Asset, Tobin’s Q, Earnings per Share, Weighted Average Cost of Capital, Market capitalization and the Free Cash Flow of the firms. We have considered a sample of around 400 companies listed on the US stock market. After running a regression between the ESG Score and the other factors we found mixed results. We found a positive correlation between the Free cash flow, Earnings per Share and the Market Capitalization of the firm and a negative correlation between the Return on Asset, Tobin’s Q and the Weighted Average Cost of Capital of the firm.
MSc in Finance Project-Simon Fraser University.
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