Exploring the Impact of ESG Factors on Company Value: A Comprehensive Literature Review
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Abstract
The growing popularity of non-financial reporting has led to an increasing number of companies disclosing information on ESG factors. Non-financial reporting involves presenting environmental, social, and corporate governance issues that are impacted by or impact the company's operations. Initially seen as a corporate social responsibility, there has been a shift in understanding as academic studies have revealed potential advantages associated with the presentation of ESG factors. This has prompted companies and researchers to explore the benefits of incorporating ESG-related aspects into their reporting practices. The current research presents a comprehensive literature review on the influence of ESG factors on company value. The study utilizes a systematic approach to identify relevant literature and evaluates the methodologies employed in the selected studies. The findings are synthesized to identify common themes and trends, while also assessing the limitations and gaps in the literature. The results of the literature review demonstrate the importance of ESG factors in shaping company value. The findings highlight the positive impact of ESG factors on stakeholder relationships, stock performance volatility, stock earnings, financing costs, and overall economic, environmental, and social performance. The study also identifies the influence of company management perceptions and interactions with rating agencies on ESG factor ratings. This article contributes to the existing body of knowledge by providing a comprehensive overview of the influence of ESG factors on company value based on a rigorous literature review. The insights generated from this research can inform decision-making processes and future research endeavors in the field of ESG factors and company valuation.
Keywords
ESG factors, environmental factors, social factors, governance factors, corporate governance, company value, review.
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