The Impact of ESG Disclosure and Performance on the Financial Performance of Listed Companies in Hong Kong
The study investigates the impact of ESG disclosure and performance on the firm performance of listed companies in Hong Kong from 2017 to 2019. The research focuses on 178 companies across four sectors (property development, transport, public utilities and catering). Data were obtained from the Bloomberg database, annual reports, and published financial statements of these firms. The analysis employed panel data regression, considering five independent variables: ESG disclosure, overall ESG performance, and individual ESG performance along with two control variables: market capitalization and proportion of independent directors. Firm performance was measured by Return on Assets (ROA), Return on Equity (ROE), and Earnings per share (EPS). The findings of this study suggest that there was no significant relationship between ESG variables and firm performance. However, a negative association was observed between overall ESG performance and EPS. These results indicate that, for most measures, ESG practices have a limited direct impact on financial performance. While the findings are consistent with some prior studies reporting a neutral relationship, they contradict the majority of the literature, which has identified significant positive relationships. This highlights the need for further research to investigate the underlying reasons for these insignificant relationships and to gain a deeper understanding of how ESG factors influence firm performance. This study also revealed that the utilities sector outperformed others in environmental, social, and overall performance, while the public transport sector excelled specifically in the governance dimension. In contrast, the property and catering sectors lagged behind across all ESG dimensions. Future research could investigate the specific factors that influence or challenge ESG performance within different industries.
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