Journal of Economics and Management Volume 20, No. 2 September, 2024

The Impact of ESG Scores on Firm Value and Financial Performance: The Mediating Role of Green Finance and Green Economy

Shu-Ching Lin

College of Business, National Taipei University of Business, Taiwan

Shen-Yuan Chen

Department and Graduate Institute of Finance, National Taipei University of Business, Taiwan

Hao-Yen Yang

Department and Graduate Institute of Finance, National Taipei University of Business, Taiwan

Abstract

This article investigates the influence of environmental, social, and governance (ESG) scores on firm value and financial performance, focusing on the mediating role of green finance and the green economy. The study uses annual 2015–2021 data from Taiwanese listed companies, as reported in the Taiwan Economic Journal. The study includes individual ESG scores, TESG total scores, and financial data such as Tobin's Q and return on equity in a regression analysis of empirical data. The results indicate that both individual ESG scores and overall TESG score positively and significantly influence firm value and financial performance. The issuance of green bonds and the development of green energy companies partially mediate the relationship between ESG scores and firm value and financial performance. The findings highlight the urgency of issuing green bonds to drive the development of the green economy. The study’s findings speak to the need for substantial financial and technological resources and robust regulatory infrastructures in addressing climate change. In particular, the findings aid the development of the green economy.

Keywords：ESG Score, Firm Value, Financial Performance, Green Bonds, Green Economy

JEL Classifications：G11, G32, Q56

BACK