The impact of ESG on firm value: The moderating role of cash holdings
This paper examines whether Environmental, Social, and Governance (ESG) performance has an impact on companies' market value and cash holdings. Drawing from 27 European Union countries, a comprehensive sample of 1144 companies was collected from LSEG Data & Analytics over an 11-year per...
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| Format: | Article |
| Language: | English |
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Elsevier
2025-01-01
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| Series: | Heliyon |
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| Online Access: | http://www.sciencedirect.com/science/article/pii/S2405844025002488 |
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| author | Omnia Ahmed Bashar Abu Khalaf |
| author_facet | Omnia Ahmed Bashar Abu Khalaf |
| author_sort | Omnia Ahmed |
| collection | DOAJ |
| description | This paper examines whether Environmental, Social, and Governance (ESG) performance has an impact on companies' market value and cash holdings. Drawing from 27 European Union countries, a comprehensive sample of 1144 companies was collected from LSEG Data & Analytics over an 11-year period (2013–2023). This research applied panel regression (fixed and random effect techniques) to investigate the relationships; based on the significant result of a Hausman test, the fixed effect regression has been analyzed. The results show that the more efficient and effective the ESG performance, the higher the company value. In addition, cash holdings affect the market value positively, which indicates that as companies hold high cash reserves, their market value increases. The main recommendation provided to different board members in the EU region is to follow the ESG principles and guidelines and to hold more cash since this should substantially raise the company's value. Our results are robust since the Tobit regression provided results similar to those of the fixed effect technique. |
| format | Article |
| id | doaj-art-4963f5a42f0e4776a09380dc4e98ecba |
| institution | Kabale University |
| issn | 2405-8440 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Heliyon |
| spelling | doaj-art-4963f5a42f0e4776a09380dc4e98ecba2025-02-02T05:28:25ZengElsevierHeliyon2405-84402025-01-01112e41868The impact of ESG on firm value: The moderating role of cash holdingsOmnia Ahmed0Bashar Abu Khalaf1Corresponding author.; College of Business, Accounting and Finance Department, University of Doha for Science and Technology, Doha, QatarCollege of Business, Accounting and Finance Department, University of Doha for Science and Technology, Doha, QatarThis paper examines whether Environmental, Social, and Governance (ESG) performance has an impact on companies' market value and cash holdings. Drawing from 27 European Union countries, a comprehensive sample of 1144 companies was collected from LSEG Data & Analytics over an 11-year period (2013–2023). This research applied panel regression (fixed and random effect techniques) to investigate the relationships; based on the significant result of a Hausman test, the fixed effect regression has been analyzed. The results show that the more efficient and effective the ESG performance, the higher the company value. In addition, cash holdings affect the market value positively, which indicates that as companies hold high cash reserves, their market value increases. The main recommendation provided to different board members in the EU region is to follow the ESG principles and guidelines and to hold more cash since this should substantially raise the company's value. Our results are robust since the Tobit regression provided results similar to those of the fixed effect technique.http://www.sciencedirect.com/science/article/pii/S2405844025002488EnvironmentalSocialGovernanceCash holdingsMarket valuePanel regression |
| spellingShingle | Omnia Ahmed Bashar Abu Khalaf The impact of ESG on firm value: The moderating role of cash holdings Heliyon Environmental Social Governance Cash holdings Market value Panel regression |
| title | The impact of ESG on firm value: The moderating role of cash holdings |
| title_full | The impact of ESG on firm value: The moderating role of cash holdings |
| title_fullStr | The impact of ESG on firm value: The moderating role of cash holdings |
| title_full_unstemmed | The impact of ESG on firm value: The moderating role of cash holdings |
| title_short | The impact of ESG on firm value: The moderating role of cash holdings |
| title_sort | impact of esg on firm value the moderating role of cash holdings |
| topic | Environmental Social Governance Cash holdings Market value Panel regression |
| url | http://www.sciencedirect.com/science/article/pii/S2405844025002488 |
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