How does ESG performance affect market valuation? Evidence for S&P 500 listed firms during 2013 : 2019

  • Johanna-Luise Sibylla Pontani (Student)

Student thesis: Master's Thesis


During the last decades the question was raised if ESG engagement only provides reputational or even also financial advantages. This paper aims to analyse how ESG performance of S&P500 listed firms impacts market valuation, measured by the Tobin’s Q ratio, during a study period of 2013 – 2019. In contrast to other literature, it finds that higher ESG performance decreases market valuation, as indicated by the slightly negative significant relationship. In order to investigate to which kinds of firms this effect is attributable to this study conducts a subsample analysis with six groups of firms. Therefore, the data sample is divided into three categories each generating a group exceeding or underperforming the mean of Company size, Leverage and ESG Rating. When examining the mean and regression results of these subsamples the researcher finds negative relationships for all of them but only the ones for smaller Company size, lower Leverage and worse ESG rating were significant. This suggests that the firms with smaller size, a lower degree of leverage and inferior rated ESG commitment are the main factors influencing how ESG performance affects market valuation. This outcome provides relevant insights for policy makers, managers, investors and firms’ stakeholders, by assisting them in their decision making.
Date of Award3 May 2023
Original languageEnglish
Awarding Institution
  • Universidade Católica Portuguesa
SupervisorGeraldo Cerqueiro (Supervisor)


  • ESG performance
  • Market value
  • Tobin’s Q
  • US S&P 500
  • Panel data
  • Subsamples firm size
  • Leverage


  • Mestrado em Finanças

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