Do ESG Priorities Matter? Pillar Weights, Institutional Ownership and Firm Value in South Africa (Asian Economic and Financial Review)

Summary

• The study investigates the relationship between relative ESG pillar weights and firm value among 79 South African listed companies from 2020 to 2024.p.1
• The initial dataset comprises 395 firm-year observations, though missing data reduces the sample size in specific regression specifications, such as 278 observations for governance-weight models.p.6
• Environmental pillar weighting demonstrates a negative association with Tobin's Q in several regression specifications, showing a coefficient of -0.0321 in the random-effects baseline model.p.12

Key insights

1. Direct relationships between environmental and social pillar priorities and firm valuation are generally weak and statistically insignificant.p.1
2. Environmental pillar emphasis exhibits a negative association with firm value proxied by Tobin's Q in specific baseline models.p.1
3. Governance pillar weighting becomes positively significant for Tobin's Q when endogeneity is controlled using an IV-FE estimator.p.1
4. Institutional ownership acts as a moderating factor, strengthening environmental and social priority valuation effects in selected models.p.1
5. Negative correlations between environmental and governance pillar weights indicate potential strategic trade-offs in firm ESG focus.p.8
6. Firm age and size consistently act as the primary positive drivers of absolute market capitalization in South African listed firms.p.8
7. Differences between market capitalization and Tobin's Q outcomes reflect distinct valuation dimensions, contrasting absolute equity scale with relative growth prospects.p.13
8. The regulatory framework should emphasize comparable pillar-specific disclosures on the JSE rather than reliance on aggregate scores.p.14