The impact of ESG factors on A-shares

Abstract

As stakeholder demand for corporate social responsibility grows, environmental, social and corporate governance (ESG) has become an important non-economic dimension in measuring corporate value. This article explores in-depth the mechanism by which ESG factors influence the value of A-share companies based on Steckler's theory, resource dependency theory, stakeholder theory, and other related theories. By creating an empirical model and selecting data from A-share companies, using the Tobin Q-Value (TBQ) to measure the value of a company, and combining the ESG assessment system with regulatory variables such as asset size and debt repayment capacity, four research hypotheses were proposed and tested. Empirical results show that good ESG performance can have a positive impact on a company’s value. There is a U-shaped relationship between environmental performance and company value. When environmental performance reaches a turning point, improving environmental performance can significantly increase the value of the enterprise; Positive social responsibility behavior correlates positively with the value of the company; Optimizing corporate governance can effectively improve the value of businesses. The replacement of the enterprise's valuation indicator with the return on equity (ROE) and the replacement of the environmental performance explanatory variable with the Huazheng rating confirmed the reliability of the above conclusions. The conclusion of the study provides important references for companies to formulate ESG strategies, for policymakers to deploy regulations, and for investor decisions, highlighting the key role of ESG factors in adding value to a company in the A-share market.