Asia Marketing Journal

Korean Marketing Association (한국마케팅학회)
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Uncovering the Relationship between ESG Practices and Firm Value: The Role of Reputation and Industry Sensitivity

  • Yanghee Kim (School of International Studies, Hanyang University) ;
  • Hojoon Jang (College of Business Administration, Seoul National University) ;
  • Junhee Seok (School of Business, Chungnam National University)
  • Received : 2023.09.06
  • Accepted : 2023.11.24
  • Published : 2024.01.31
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Abstract

Considering the rising interest in environmental, social, and governance (ESG) globally, various studies have shown that ESG practice increases firm value; however, there is still much debate. This study focuses on the relationship between ESG practice and firm value. Further, we identify the mechanisms constituting this relationship to address relevant research gaps. Specifically, this study examines the connection between ESG practice and corporate valuation, emphasizing the mediating role of a company's reputation. Using panel analysis of data from 145 Korean firms (2014-2021), the study reveals that ESG practices notably enhance firm value, signaling their significance to stakeholders. Corporate reputation acts as a bridge between ESG efforts and value, with corporate reputation's influence varying across industries. This research presents broad implications for both academic and industrial fields, highlighting the strategic importance of ESG in enhancing firm value.

Keywords

Acknowledgement

This work was partly supported by Institute of Information & communications Technology Planning & Evaluation (IITP) grant funded by the Korea government (MSIT) (No. 2020-0-01373, Artificial Intelligence Graduate School Program (Hanyang University)) and the research fund of Hanyang University (HY-2023).

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