The study’s goal is to examine the relationship between Indian businesses’ financial performance and their ESG score. The study finds the levels of relation between ESG disclosures and firms’ performance and analyses the degree of association between ESG indices and firms’ performance. The research uses 45 Indian companies that are part of the BSE S&P-100 index as samples. Data was gathered during a ten-year period, from 2013–14 to 2022–23. Various ESG disclosures are treated as an independent variable. Three sub-indices of the ESG disclosures are environmental, social, and governance. The financial performance is a dependent variable. ROA, ROE, ROCE, and EPS measure financial performance. The validity of the sub-indices of ESG disclosures is analyzed through the KMO test. The stationarity of the time series data has been verified using the ADF (Augmented Dickey-Fuller) test. VIF (variance influence factor) has been used to test the multicollinearity of the independent variables. To ensure the robustness of the results, the Fixed Effects (FE) method is employed in the analysis of the panel data. According to the study, ROA and ROCE are significantly impacted by disclosures about governance and the environment. However social disclosures have a negative significant effect on ROA.

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Impact of ESG Disclosures on Firms’ Financial Performance: An Empirical Analysis from Selected Indian Firms

  • Arijit Banerjee

摘要

The study’s goal is to examine the relationship between Indian businesses’ financial performance and their ESG score. The study finds the levels of relation between ESG disclosures and firms’ performance and analyses the degree of association between ESG indices and firms’ performance. The research uses 45 Indian companies that are part of the BSE S&P-100 index as samples. Data was gathered during a ten-year period, from 2013–14 to 2022–23. Various ESG disclosures are treated as an independent variable. Three sub-indices of the ESG disclosures are environmental, social, and governance. The financial performance is a dependent variable. ROA, ROE, ROCE, and EPS measure financial performance. The validity of the sub-indices of ESG disclosures is analyzed through the KMO test. The stationarity of the time series data has been verified using the ADF (Augmented Dickey-Fuller) test. VIF (variance influence factor) has been used to test the multicollinearity of the independent variables. To ensure the robustness of the results, the Fixed Effects (FE) method is employed in the analysis of the panel data. According to the study, ROA and ROCE are significantly impacted by disclosures about governance and the environment. However social disclosures have a negative significant effect on ROA.