Date on Honors Thesis

Spring 5-10-2024

Major

B.S. Economics & B.S. Finance

Examining Committee Member

Beau Sauley, PhD, Advisor

Examining Committee Member

Christopher Craig, PhD, Committee Member

Examining Committee Member

Michael D'Antuono, Committee Member

Abstract/Description

ESG, Environmental, Social, Governance, is a new business philosophy that asserts that businesses have a duty to the environment, their communities, and to act legally and ethically. ESG rating agencies are built around grading public companies on their fulfillment of these objectives. Critics of ESG cite that ESG dilutes the primary purpose of business, to create value for shareholders. This paper uses regression analysis to test whether these perspectives are mutually exclusive. With stock returns as the dependent variable and ESG ratings as the dependent variable of interest, this paper finds a slight correlation between lower returns and companies in the Laggard category. Expanding on this finding, this paper analyzes the impact of upgrades and downgrades to ESG rating categories; however, the results are inconsistent with the initial finding.

Additional Author Comments

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