The Relationship between ESG and Financial Performance of the Companies Listed in SET50
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Abstract
This study aims to examine the impact and relationship between ESG scores and ESG criteria separately, over financial performances by using dataset of 50 firms listed in the Stock Exchange of Thailand (SET50). To measure financial performance, we employ three different dependent variables of Tobin’s Q, return on equity, and return on asset. develop hypotheses and test them by applying regression analysis and using correlation matrix, descriptive statistics with panel data to analyze data of companies listed in SET50 which spans the years 2020 to 2023. Our findings suggest that ESG combined score is positively and significantly associated with ROA. Individual environmental and social scores have a positive and significant relationship while governance score does not have a significant relationship with ROA. On the other hand, only social scores have a positive and significant relationship with ROE. Results of Tobin’s Q suggest that environmental scores have a positive and significant relationship, but social scores have a negative and significant relationship with Tobin’s Q. These findings imply that investing in strong ESG performance yields financial returns for the firm, enhancing both its value and profitability.
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