ESG ratings and financial performance: a case of JSE listed firms.
| dc.contributor.advisor | Alhassan, Latif | |
| dc.contributor.author | Chininga, Emmerson | |
| dc.date.accessioned | 2023-10-31T12:37:54Z | |
| dc.date.available | 2023-10-31T12:37:54Z | |
| dc.date.issued | 2022 | |
| dc.date.updated | 2023-10-31T07:09:29Z | |
| dc.description.abstract | High net-worth individuals and institutions are assumed to have developed much interest in the Environmental, Social and Governance (ESG) activities of a business in pursuit of risk-adjusted returns. There is rapid growing of ESG assets under management globally from US$22.8 trillion in 2016 to US$35 trillion in 2020, a clear evidence of increasing appetite for long term returns. By factoring ESG ratings in their investment decisions, investors are taking calculated risks in their choice of investments. In July 2017, Africa had over US$428 billion of ESG assets under management and South Africa had the biggest proportion with its most advanced financial system. ESG investors are concerned about costs that comes with unsustainable practices like use of fossil fuels and governance malpractices including corruption. The study examines the impact of ESG ratings on the financial performance of JSE/FTSE Russel's Responsibility Investment listed firms. The study utilises annual firm data on 40 firms listed on the JSE/FTSE Responsible Investment Index between 2015-2019. The panel data regression models were estimated using both random effects and fixed effects models. Results revealed that overall ESG rating has a significantly negative impact on Tobin's Q. No significant effect was noted on other financial performance measures; return on assets (ROA) and abnormal gains and losses (ABGL). Of the ESG pillars, environmental and social have negative significant impact on ABGL and Tobin's Q respectively. Governance does not show any significant relationships. These results could mean the South African investors do not value the firms' involvement in activities that are sustainable and do not consider the firms steps to increase governance practices which reduces their riskiness. The study is essential to ESG stakeholders including investors, in climate change, in geopolitical relations and to financial markets stability. To the policy makers, they need to put in place incentives for ESG investors such as tax concessions, tax breaks to attract long term ESG investments. | |
| dc.identifier.apacitation | Chininga, E. (2022). <i>ESG ratings and financial performance: a case of JSE listed firms</i>. (). ,Faculty of Commerce ,Graduate School of Business (GSB). Retrieved from http://hdl.handle.net/11427/39051 | en_ZA |
| dc.identifier.chicagocitation | Chininga, Emmerson. <i>"ESG ratings and financial performance: a case of JSE listed firms."</i> ., ,Faculty of Commerce ,Graduate School of Business (GSB), 2022. http://hdl.handle.net/11427/39051 | en_ZA |
| dc.identifier.citation | Chininga, E. 2022. ESG ratings and financial performance: a case of JSE listed firms. . ,Faculty of Commerce ,Graduate School of Business (GSB). http://hdl.handle.net/11427/39051 | en_ZA |
| dc.identifier.ris | TY - Thesis / Dissertation AU - Chininga, Emmerson AB - High net-worth individuals and institutions are assumed to have developed much interest in the Environmental, Social and Governance (ESG) activities of a business in pursuit of risk-adjusted returns. There is rapid growing of ESG assets under management globally from US$22.8 trillion in 2016 to US$35 trillion in 2020, a clear evidence of increasing appetite for long term returns. By factoring ESG ratings in their investment decisions, investors are taking calculated risks in their choice of investments. In July 2017, Africa had over US$428 billion of ESG assets under management and South Africa had the biggest proportion with its most advanced financial system. ESG investors are concerned about costs that comes with unsustainable practices like use of fossil fuels and governance malpractices including corruption. The study examines the impact of ESG ratings on the financial performance of JSE/FTSE Russel's Responsibility Investment listed firms. The study utilises annual firm data on 40 firms listed on the JSE/FTSE Responsible Investment Index between 2015-2019. The panel data regression models were estimated using both random effects and fixed effects models. Results revealed that overall ESG rating has a significantly negative impact on Tobin's Q. No significant effect was noted on other financial performance measures; return on assets (ROA) and abnormal gains and losses (ABGL). Of the ESG pillars, environmental and social have negative significant impact on ABGL and Tobin's Q respectively. Governance does not show any significant relationships. These results could mean the South African investors do not value the firms' involvement in activities that are sustainable and do not consider the firms steps to increase governance practices which reduces their riskiness. The study is essential to ESG stakeholders including investors, in climate change, in geopolitical relations and to financial markets stability. To the policy makers, they need to put in place incentives for ESG investors such as tax concessions, tax breaks to attract long term ESG investments. DA - 2022 DB - OpenUCT DP - University of Cape Town KW - development finance LK - https://open.uct.ac.za PY - 2022 T1 - ESG ratings and financial performance: a case of JSE listed firms TI - ESG ratings and financial performance: a case of JSE listed firms UR - http://hdl.handle.net/11427/39051 ER - | en_ZA |
| dc.identifier.uri | http://hdl.handle.net/11427/39051 | |
| dc.identifier.vancouvercitation | Chininga E. ESG ratings and financial performance: a case of JSE listed firms. []. ,Faculty of Commerce ,Graduate School of Business (GSB), 2022 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/39051 | en_ZA |
| dc.language.rfc3066 | Eng | |
| dc.publisher.department | Graduate School of Business (GSB) | |
| dc.publisher.faculty | Faculty of Commerce | |
| dc.subject | development finance | |
| dc.title | ESG ratings and financial performance: a case of JSE listed firms. | |
| dc.type | Thesis / Dissertation | |
| dc.type.qualificationlevel | Masters | |
| dc.type.qualificationlevel | MCOM |