The impact of ESG and its pillars on the performance of venture capital-backed companies

Abstract

This master's thesis investigates the relationship between Environmental, Social, and Governance (ESG) factors and the financial performance of Venture Capital (VC)-backed European companies. The study uses a panel dataset comprising 124 VC-backed firms. The performance metrics usedare Tobin's Q and stock return. The research delves into the ESG and its separate pillar scores, to discern their impacts on the financial outcomes of the VC-backed companies. Environmental factors reflect the company's ecological footprint and resource utilization, social considerations encompass labor practices and community engagement, while governance pertains to corporate structure and decision-making processes. By evaluating each pillar, this study aims to provide insights into which aspects of ESG contribute most significantly to performance. To analyse theseinteractions, the research employs fixed-effects regression techniques. This approach accommodates the nature of the panel dataset and facilitates the identification of causal relationships between ESG factors and financial performance metrics. The findings of this study are expected to offer insights to both practitioners and policymakers regarding the impact of ESG on VC-backed companies. Moreover, understanding the influence of each ESG pillar will enable stakeholders to tailor their sustainability strategies effectively.

Date of Award	24 Oct 2023
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Fátima Shuwaikh (Supervisor)