The Empirical Examination of the Effect of Environmental, Social, and Governance (ESG) Performance on Enterprise Value: Focusing on Real Estate Agencies

Ketao Zhang

doi:10.62051/ijgem.v4n1.24

Authors

Ketao Zhang

DOI:

https://doi.org/10.62051/ijgem.v4n1.24

Keywords:

ESG performance, Firm value, Real estate companies

Abstract

In the 21st century, modern production techniques and technological advancements have yielded remarkable development achievements, yet they are accompanied by challenges posed by energy and resource scarcity, ecological and environmental strain, and pressing social issues. Recently, the spotlight has shifted to environmental, social, and governance (ESG) factors, as negative social events have heightened public awareness. The impact of corporate ESG performance on society is significant, and the public's perception can, in turn, affect corporate profitability and overall value. As such, investors are increasingly realizing the importance of considering ESG metrics in their decisions. While ESG investment is still in its nascent stage domestically, it has garnered widespread attention and is rapidly gaining momentum. Indices and related derivative products themed around ESG, such as the ESG Beauty 50 index, have been launched on domestic exchanges like the Shanghai Stock Exchange and China Securities Index. Taking the real estate industry as a case study, this paper aims to accomplish the following through a combination of literature research and empirical analysis: Firstly, to assess whether ESG performance varies across companies with diverse characteristics (such as state-ownership status, enterprise size, and so forth) and explore its differential impact on enterprise value. Secondly, to raise awareness among company managers regarding the critical role of ESG performance in shaping the future sustainability and long-term value of their organizations.

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