Uncovering the Relationship between ESG Practices and Firm Value: The Role of Reputation and Industry Sensitivity

Yanghee Kim, Post-Doc., School of International Studies, Hanyang University, Seoul, KoreaFollow
Hojoon Jang, Doctoral Student, College of Business Administration, Seoul National University, Seoul, KoreaFollow
Junhee Seok, Professor, School of Business, Chungnam National University, KoreaFollow

ORCID

Junhee Seok: 0009-0003-7526-8036

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.

Recommended Citation

Kim, Yanghee; Jang, Hojoon; and Seok, Junhee (2024) "Uncovering the Relationship between ESG Practices and Firm Value: The Role of Reputation and Industry Sensitivity," Asia Marketing Journal: Vol. 25 : Iss. 4 , Article 3.
Available at: https://doi.org/10.53728/2765-6500.1620