Do ESG Scorecards Matter? Evidence from Panel Data on S&P 500 Firms
Major
Economics
Submission Type
Poster
Area of Study or Work
Economics, Environmental Studies
Faculty Advisor
Bryan McCannon
Location
CNS Atrium
Start Date
4-11-2026 11:15 AM
End Date
4-11-2026 12:30 PM
Abstract
This study examines whether ESG scorecards are financially material for firms in the Standard & Poor’s 500 over the period 2015–2023. Using firm-level panel data, I estimate twelve OLS regressions with year fixed effects to analyze both aggregate ESG scores and the individual environmental, social, and governance pillars. Firm performance is measured through return on assets (ROA), return on equity (ROE), and price-to-earnings (P/E) ratios. Models are estimated with and without controls for firm size, financial leverage, and systematic market risk (beta) to separate ESG effects from traditional financial determinants. The results show limited and inconsistent statistical relationships across specifications, with low overall explanatory power. Some pillar-level correlation appears in baseline models but weaken once financial controls are introduced. Overall, ESG metrics explain only a small portion of variation in profitability and market valuation among large-cap U.S. firms. These findings suggest that ESG scorecards may operate more as indicators of corporate positioning and signaling rather than as primary drivers of financial performance. The study contributes to the broader discussion on whether ESG measures provide incremental value-relevant information in capital markets.
Do ESG Scorecards Matter? Evidence from Panel Data on S&P 500 Firms
CNS Atrium
This study examines whether ESG scorecards are financially material for firms in the Standard & Poor’s 500 over the period 2015–2023. Using firm-level panel data, I estimate twelve OLS regressions with year fixed effects to analyze both aggregate ESG scores and the individual environmental, social, and governance pillars. Firm performance is measured through return on assets (ROA), return on equity (ROE), and price-to-earnings (P/E) ratios. Models are estimated with and without controls for firm size, financial leverage, and systematic market risk (beta) to separate ESG effects from traditional financial determinants. The results show limited and inconsistent statistical relationships across specifications, with low overall explanatory power. Some pillar-level correlation appears in baseline models but weaken once financial controls are introduced. Overall, ESG metrics explain only a small portion of variation in profitability and market valuation among large-cap U.S. firms. These findings suggest that ESG scorecards may operate more as indicators of corporate positioning and signaling rather than as primary drivers of financial performance. The study contributes to the broader discussion on whether ESG measures provide incremental value-relevant information in capital markets.