RT Journal Article
SR Electronic
T1 The Relationship Between Environmental Social Governance Factors and U.S. Stock Performance
JF The Journal of Investing
FD Institutional Investor Journals
SP 104
OP 112
DO 10.3905/joi.2010.19.3.104
VO 19
IS 3
A1 Dinusha Peiris
A1 John Evans
YR 2010
UL https://pm-research.com/content/19/3/104.abstract
AB The focus by investment practitioners on the impacts of non-traditional environmental and governance issues has intensified in recent times as a result of global events. Most studies examine the relationship between environmental social governance (ESG) factors and portfolio returns. This article extends those studies by analyzing the impacts on stock valuation and operating performance of U.S. listed companies. Using a multifactor framework, the article provides evidence of a significant positive relationship between particular ESG rating criteria and both return on assets and market-to-book-value measures, supporting the theory that Corporate Social Performance is positive for Corporate Financial Performance. Analysis also shows that employment conditions are a more relevant influence than other stakeholder criteria and that a company’s involvement in more general non-stakeholder-related social issues contributes negatively to both operating performance and stock return.TOPICS: ESG investing, security analysis and valuation, performance measurement