HO CHi MINH BAO CAO TONG KET DE TAI NGHIEN CUU KHOA HQC THAM GIA XET GIAI THUONG “NHÀ NGHIEN CUU TRE UEH”’ NAM 2024 IMPACT OF ESG SCORES ON STOCK PRICES OF LEADING F&B COMPANIES DUR
Theoretical background . - - - 1 2211222211112 23 1115211118121 11 n1 51 11111 ra 8 1 NHÍ - | n4
Results & Discussion
Discussion and recommendlatfio1s -. - S2 S2 2n nh ray 33 7, Limitations and further research 36 REFERENCES nh HH HH HH TH HH TH HH Hà HH ệu 38
Table 9 Summary of results from FGLS model
The results of table 3.1 show that ESG scores have an impact on stock prices through the FLGS model Based on table 3.13, the ESG score effects in the same direction as the stock price with high confidence (p-value < 0.05) Therefore, it can be affirmed that the regression model is appropriate
Specifically, according to the results obtained from the FGLS model, for the dependent variable 1s the share price, it shows that the ESG score has the same effect direction on the stock price, and when the ESG score increases by 1%, the share price increases by 11.13% This means that companies that are interested in investing in the ESG index will see their share prices rise compared to those that don't invest or invest less well The fact that companies care about ESG will also help companies strengthen their reputation and customer trust A company that cares about ESG is seen as making environmentally and socially responsible business decisions This can build and enhance customer trust, while increasing a company's brand value and competitiveness In addition, the company's interest in ESG scores also helps drive growth and improve financial performance (Subin Yoo et al., 2022) Concern for ESG is often accompanied by optimizing resource use, mitigating risk, and improving business processes These measures can help the company grow sustainably and enhance its financial performance in the long term Besides, the company's ESG- related actions can also limit risks and strengthen the company's resilience (Nana Xu et_al., 2023) Consideration of environmental, social and governance factors can help companies identify and manage risks related to the environment, social issues, and corporate governance This minimizes the risks of legal consequences, company image risks and strengthens resilience in complex business environments
In addition, the results also show that the effect of COVID-19 on stock prices is not statistically significant (due to the large p-value) The reason for this result may be that the companies in the sample are from different countries, and the statistics of the COVID_19, based on the total number of global cases, may not have been representative for all companies in the sample However, based on the research results, the impact of the COVID-19 epidemic on stock prices is negligible compared to the rest of the variables
Variable Market Cap measures company size to have an inverse and negligible effect on stock prices The results from the regression model show that the reliability from this result is very high, it can be concluded that the size of the company has an insignificant effect on the studied dependent variable which is the share price
The model also provides metrics for the dummy variable of the model The P-value of the dummy variable is 0.01 P-value represents how reliable the results are In this case, the p-value is very small, only 0.01, indicating that the reliable level of the data is high, and there is a significant degree of difference in share prices between the two groups of enterprises (large and medtum/small)
The interaction variable of the model with a Coef value of 3.38e-07 (3.38 times 10 exponents -7, or 0.0000000338) represents the average rate of change in stock prices when there is an interaction between COVID-19 variables and ESG scores In this case, the coefficient was very small, suggesting that the interaction between COVID-
19 and the ESG score had no significant effect on the stock price In addition, the p- value of the interaction variable is 0.773, indicating that there is insufficient evidence to conclude that this interaction variable has a significant effect on the stock price This can be explained because the interaction variable is from two variables ESG Score and COVID_19, which can be seen from the conclusion above that measuring the impact of COVID-19 by the number of global cases may not be suitable for the construction model
From the results, we recommend that F&B companies first prioritize the integration of Environmental, Social, and Governance (ESG) practices into their business strategies
By doing so, companies can enhance their reputation, build customer trust, and drive long-term growth while also mitigating risks and strengthening resilience in complex business environments Companies should also proactively manage environmental, social, and governance risks to ensure resilience and continuity By identifying and addressing potential vulnerabilities through robust risk management practices, companies can mitigate adverse impacts on their financial performance and reputation Finally, policymakers and regulatory bodies should develop and implement policies that incentivize ESG adoption and disclosure, thereby promoting transparency, accountability, and investor confidence By promoting transparency and accountability in ESG reporting, policymakers can empower investors to make informed decisions, drive positive change in corporate behavior, and foster a more sustainable and resilient economy These measures not only align with ethical and sustainable business practices but also contribute to improved financial performance and sustainable growth in the F&B industry
This study has provided valuable insights into the impact of ESG scores on stock prices within the F&B industry during the COVID-19 pandemic However, several areas for improvement and avenues for further research are worth exploring
Firstly, the choice of metric used to assess the impact of COVID-19 on stock prices— namely, "International COVID-19 positive cases"—may not have fully captured the nuanced effects of the pandemic on individual companies within the sector Future research could consider alternative metrics, such as local infection rates, government response stringency indices, or economic indicators specific to each company's operating environment, to provide a more comprehensive analysis
Moreover, while this study included companies from various countries, the geographical diversity of the sample may have introduced heterogeneity that influenced the results Future research could focus on specific regions or countries to provide a more localized perspective on the relationship between ESG scores, COVID-19, and stock prices within the F&B industry
Additionally, this study primarily adopted a cross-sectional approach, analyzing data at a single point in time Future research could employ longitudinal data analysis techniques to examine how the relationship between ESG scores and stock prices evolves over time, particularly in response to dynamic external factors such as the ongoing COVID-19 pandemic and evolving regulatory landscapes
Furthermore, while this study considered ESG scores, COVID-19 metrics, and company size, other potentially relevant variables, such as financial performance indicators, industry-specific factors, and corporate governance practices, were not included in the analysis Future research could incorporate a broader range of variables to provide a more comprehensive understanding of the determinants of stock prices in the F&B sector
Finally, the accuracy and availability of data, particularly ESG scores and COVID-19 metrics, may vary across different regions and companies, potentially influencing the study's findings Future research could address these concerns by utilizing robust data sources and employing advanced data validation techniques to ensure the reliability and consistency of the results
By addressing these limitations and conducting further research in these areas, scholars can advance our understanding of the complex interplay between ESG practices, external shocks such as the COVID-19 pandemic, and stock price dynamics within the F&B industry, ultimately contributing to more informed decision-making by investors, policymakers, and industry stakeholders
Jeffrey M Wooldridge, “Introductory Econometrics: A Modern Approach’, Sth edition, 447 - 703
.Broadstock, D C., Chan, K., Cheng, L T W., & Wang, X (2021) The role of ESG performance during times of financial crisis: Evidence from COVID-19 in
China Finance Research Letters, 38, 101716 https://doi.org/10.1016/,.fr1.2020.101716
Cao, C., Xia, C., & Chan, K C (2016) Social trust and stock price crash risk: Evidence from China /mternational Review of Economics & Finance, 46, 148—
Chen, C., Su, C., & Chen, M (2022) Understanding how ESG-focused airlines reduce the impact of the COVID-19 pandemic on stock returns Journal of Air
Transport Management, 102, 102229 https://doi.org/10.1016/ jairtraman.2022.102229
De Silva Lokuwaduge, C., & Heenetigala, K (2016) Integrating Environmental, Social and Governance (ESG) Disclosure for a Sustatnable Development: an Australian study Business Strategy and the Environment, 26(4), 438-450 https://dot.org/10.1002/bse 1927 oN ơ] he â
Duarte, P., Mouro, C., & Neves, J G D (2010) Corporate social responsibility: mapping its social meaning Management Research, 8(2), 101-122 https://dot.org/10.1108/1536-541011066461
Ferriani, F., & Natoli, F (2020) ESG risks in times of Covid-19 Applied
Economics Letters, 28(18), 1537-1541 https://do1.org/10.1080/1350485 1.2020.1830932