Esg risk ratings and enterprise value: Empirical evidence of united states

Abstract

This empirical study investigates the correlation between ESG risk ratings and firm value using a U.S. sample. ESG risk ratings, which measure a company's sustainability performance across environmental, social, and governance dimensions, have gained prominence in recent years. Our findings underscore the substantial influence of ESG factors on investment decisions, corporate reputation, and overall operational performance. Through a mixed-methods analysis of 100 US-listed companies, this study demonstrates a strong link between ESG performance and firm value. The data, which includes ESG scores and financial metrics like EV, P/B ratio, and gross profit margin, reveals that companies with higher ESG ratings tend to experience lower costs of capital, increased investor confidence, and better financial performance. These findings underscore the strategic value of ESG practices and support the notion that a focus on stakeholders can lead to long-term sustainable growth. The study's findings underscore the imperative for businesses to incorporate effective ESG strategies to navigate the increasingly complex regulatory landscape and attract long-term, sustainable investments. To enhance the credibility and comparability of ESG data, the research also calls for the development of standardized ESG reporting frameworks Despite its valuable findings, the study recognizes certain limitations, including data availability and industry-specific differences in ESG impacts. The authors propose future research avenues such as cross-country comparisons, in-depth industry analyses, and the incorporation of qualitative methods to enrich the quantitative findings. Overall, this research underscores the strategic importance of ESG in fostering business resilience and long-term sustainable growth