"The moderating effect of total assets on the relationship of ESG score" by Deniza Jocelle V. Miranda

Date of Publication

8-2024

Document Type

Master's Thesis

Degree Name

Master of Science in Accountancy

Subject Categories

Accounting

College

Ramon V. Del Rosario College of Business

Department/Unit

Accountancy

Thesis Advisor

Joy Lynn R. Legaspi

Defense Panel Chair

Jonathan P. Binaluyo

Defense Panel Member

Brian Christian S. Villaluz
Aristotle Manuel D. Go

Abstract/Summary

Understanding the relationship between Environmental, Social, and Governance (ESG) scores and financial and stock performance has become imperative in the hotel and entertainment services industry in recent years. This industry, a significant contributor to global GDP and employment, is increasingly focused on sustainability practices. This study investigates how firm size, as determined by total assets, moderates the ESG-performance relationship. Using a balanced panel data analysis of 175 companies from various regions of Americas, Europe, Asia, Oceania, and Africa for 2019-2023 reveal findings that there is no direct impact of ESG scores on Return on Assets (ROA) or Return on Equity (ROE). However, total assets significantly moderate the ESG-ROA and ESG-ROE relationships. A strong positive impact of ESG scores on Price-to-Earnings (P/E) ratio, indicating a premium valuation for firms with strong ESG performance. Interestingly, firm size does not moderate this relationship. These results highlight the multifaceted nature of ESG's financial impact. While size matters for ROA and ROE, strong ESG performance remains a significant driver for market valuation across all firm sizes. The study emphasizes the need for a nuanced approach to ESG integration.

Abstract Format

html

Language

English

Format

Electronic

Keywords

Corporate governance; Social responsibility of business; Hospitality industry—Economic aspects

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Embargo Period

8-11-2024

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