BUSINESS VALUATION AND ESG FACTORS – AN INTEGRATED APPROACH
Considering the rising popularity of reporting ESG (environment, social, governance) related actions, a natural curiosity was born among investors, and other parties, whether it can affect the business value or not. The answers regarding the integration of ESG factors into business valuation are...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | deu |
| Published: |
University of Oradea
2023-07-01
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| Series: | Annals of the University of Oradea: Economic Science |
| Subjects: | |
| Online Access: | https://anale.steconomiceuoradea.ro/en/wp-content/uploads/2024/02/AUOES.July_.202328.pdf |
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| Summary: | Considering the rising popularity of reporting ESG (environment, social,
governance) related actions, a natural curiosity was born among investors, and other
parties, whether it can affect the business value or not. The answers regarding the
integration of ESG factors into business valuation are still contradictory, with the tendency
towards those who positively support this statement. This study aims to observe some of the
potential correlations between ESG factors reported and business valuation. To understand
the connectivity, we reviewed key works from the literature regarding this topic and looked
for the optimal approach for integrating ESG factors into the business valuation. In this
regard, an empirical study case on Romanian companies was developed. The investigated
period was from 2020 to 2022. The purpose of the study was to identify the correlations
between the most used profitability indicators, price multiples, EV/EBITDA, and ESG
Scores. Results showed that the company with the highest ESG score had better profitability,
and was the best performing on the market. However, because ESG reporting is still a new
challenge for Romanian companies, and measuring the ESG score is still in its infancy stage,
we proposed that domestic companies should prepare better to report and disclose
sustainability data and regulators should support the companies by developing and
promoting sustainability and ESG reporting and disclosure principles, ethics and guides |
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| ISSN: | 1222-569X 1582-5450 |