Green gains: a case for South African-listed firms

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dc.contributor.advisorKarimu, Amin
dc.contributor.authorGichanga, John Mwati
dc.date.accessioned2025-11-20T13:13:45Z
dc.date.available2025-11-20T13:13:45Z
dc.date.issued2025
dc.date.updated2025-11-20T13:06:48Z
dc.description.abstractThis study investigates the impact of Environmental, Social, and Governance (ESG) performance on firm value and profitability for firms listed on the South Africa Stock Exchange from 2013 to 2021, using data from Bloomberg. To mitigate possible endogeneity, we utilized the two-stage least squares (2SLS) regression model, using lagged ESG scores (L2), ESG- related bonuses, and executive compensation as instruments. Our findings reveal that strong ESG performance positively influences firm profitability, but negatively impacts firm value as measured by Tobin's Q. The study suggests that ESG can enhance a firm's efficiency in its current operations, but it does not significantly contribute to its value creation. Furthermore, the Governance dimension of ESG is not statistically significant in both Tobin's Q and ROA models. Fixed Effects Model (FEM) analysis yielded insignificant results, highlighting the potential effects of endogeneity and its consequences if not addressed. This research contributes to the literature on ESG and financial performance by demonstrating the effectiveness of using robust instrumental variables and controlling for unobserved time- varying factors to derive unbiased estimates. The insights gained from this study can inform policymakers, industry leaders, and academics about the strategic integration of ESG considerations into corporate and investment practices, ultimately fostering sustainable development and enhancing financial performance.
dc.identifier.apacitationGichanga, J. M. (2025). <i>Green gains: a case for South African-listed firms</i>. (). University of Cape Town ,Faculty of Commerce ,School of Economics. Retrieved from http://hdl.handle.net/11427/42284en_ZA
dc.identifier.chicagocitationGichanga, John Mwati. <i>"Green gains: a case for South African-listed firms."</i> ., University of Cape Town ,Faculty of Commerce ,School of Economics, 2025. http://hdl.handle.net/11427/42284en_ZA
dc.identifier.citationGichanga, J.M. 2025. Green gains: a case for South African-listed firms. . University of Cape Town ,Faculty of Commerce ,School of Economics. http://hdl.handle.net/11427/42284en_ZA
dc.identifier.ris TY - Thesis / Dissertation AU - Gichanga, John Mwati AB - This study investigates the impact of Environmental, Social, and Governance (ESG) performance on firm value and profitability for firms listed on the South Africa Stock Exchange from 2013 to 2021, using data from Bloomberg. To mitigate possible endogeneity, we utilized the two-stage least squares (2SLS) regression model, using lagged ESG scores (L2), ESG- related bonuses, and executive compensation as instruments. Our findings reveal that strong ESG performance positively influences firm profitability, but negatively impacts firm value as measured by Tobin's Q. The study suggests that ESG can enhance a firm's efficiency in its current operations, but it does not significantly contribute to its value creation. Furthermore, the Governance dimension of ESG is not statistically significant in both Tobin's Q and ROA models. Fixed Effects Model (FEM) analysis yielded insignificant results, highlighting the potential effects of endogeneity and its consequences if not addressed. This research contributes to the literature on ESG and financial performance by demonstrating the effectiveness of using robust instrumental variables and controlling for unobserved time- varying factors to derive unbiased estimates. The insights gained from this study can inform policymakers, industry leaders, and academics about the strategic integration of ESG considerations into corporate and investment practices, ultimately fostering sustainable development and enhancing financial performance. DA - 2025 DB - OpenUCT DP - University of Cape Town KW - Environmental, Social KW - and Governance (ESG) KW - Firm Value KW - Profitability KW - South Africa Stock Exchange KW - Two-Stage Least Squares (2SLS) KW - Endogeneity KW - Tobin's Q KW - ROA KW - Fixed Effects Model (FEM) KW - Instrumental Variables KW - Corporate Financial Performance KW - ESG Integration LK - https://open.uct.ac.za PB - University of Cape Town PY - 2025 T1 - Green gains: a case for South African-listed firms TI - Green gains: a case for South African-listed firms UR - http://hdl.handle.net/11427/42284 ER - en_ZA
dc.identifier.urihttp://hdl.handle.net/11427/42284
dc.identifier.vancouvercitationGichanga JM. Green gains: a case for South African-listed firms. []. University of Cape Town ,Faculty of Commerce ,School of Economics, 2025 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/42284en_ZA
dc.language.isoen
dc.language.rfc3066eng
dc.publisher.departmentSchool of Economics
dc.publisher.facultyFaculty of Commerce
dc.publisher.institutionUniversity of Cape Town
dc.subjectEnvironmental, Social
dc.subjectand Governance (ESG)
dc.subjectFirm Value
dc.subjectProfitability
dc.subjectSouth Africa Stock Exchange
dc.subjectTwo-Stage Least Squares (2SLS)
dc.subjectEndogeneity
dc.subjectTobin's Q
dc.subjectROA
dc.subjectFixed Effects Model (FEM)
dc.subjectInstrumental Variables
dc.subjectCorporate Financial Performance
dc.subjectESG Integration
dc.titleGreen gains: a case for South African-listed firms
dc.typeThesis / Dissertation
dc.type.qualificationlevelMasters
dc.type.qualificationlevelMCom
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