Impact of Sustainability on Firm Value and Financial Performance in the Air Transport Industry

In this study, we examine the extent to which the implementation of environmental, social, and governance (ESG) disclosures influence the firm value and financial performance of airlines. The panel data analysis is applied to the set of collected data from the Thomson Reuters Eikon database for the...

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Main Authors: Yaghoub Abdi, Xiaoni Li, Xavier Càmara-Turull
Format: Article
Language:English
Published: MDPI AG 2020-11-01
Series:Sustainability
Subjects:
Online Access:https://www.mdpi.com/2071-1050/12/23/9957
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spelling doaj-0e3db949b8324f1ba7224ccd875b57422020-11-29T00:02:16ZengMDPI AGSustainability2071-10502020-11-01129957995710.3390/su12239957Impact of Sustainability on Firm Value and Financial Performance in the Air Transport IndustryYaghoub Abdi0Xiaoni Li1Xavier Càmara-Turull2Department of Business management, Faculty of Business and Economics, Universitat Rovira i Virgili, 43204 Reus, Tarragona, SpainDepartment of Business management, Faculty of Business and Economics, Universitat Rovira i Virgili, 43204 Reus, Tarragona, SpainDepartment of Business management, Faculty of Business and Economics, Universitat Rovira i Virgili, 43204 Reus, Tarragona, SpainIn this study, we examine the extent to which the implementation of environmental, social, and governance (ESG) disclosures influence the firm value and financial performance of airlines. The panel data analysis is applied to the set of collected data from the Thomson Reuters Eikon database for the sample of 27 airlines worldwide from 2013 to 2019. Findings of this study support the positive relationship between the environmental pillar score (Env) and governance pillar score (Gov), with market-to-book ratio and Tobin’s Q as proxies for firm value and financial performance, respectively. This finding implies that an increase in both pillars leads to higher market value and financial efficiency for investigated airlines. Therefore, an airline’s effort to improve Env and Gov dimensions will lead to higher market value and return on invested funds. In contrast, the social pillar disclosure in both models is found to have a significant negative association with the dependent variables, showing that airlines’ social activities result in lower value as well as level of performance.https://www.mdpi.com/2071-1050/12/23/9957sustainabilityfirm valuefinancial performanceair transport industryenvironmental, social and governance (ESG)market-to-book ratio
collection DOAJ
language English
format Article
sources DOAJ
author Yaghoub Abdi
Xiaoni Li
Xavier Càmara-Turull
spellingShingle Yaghoub Abdi
Xiaoni Li
Xavier Càmara-Turull
Impact of Sustainability on Firm Value and Financial Performance in the Air Transport Industry
Sustainability
sustainability
firm value
financial performance
air transport industry
environmental, social and governance (ESG)
market-to-book ratio
author_facet Yaghoub Abdi
Xiaoni Li
Xavier Càmara-Turull
author_sort Yaghoub Abdi
title Impact of Sustainability on Firm Value and Financial Performance in the Air Transport Industry
title_short Impact of Sustainability on Firm Value and Financial Performance in the Air Transport Industry
title_full Impact of Sustainability on Firm Value and Financial Performance in the Air Transport Industry
title_fullStr Impact of Sustainability on Firm Value and Financial Performance in the Air Transport Industry
title_full_unstemmed Impact of Sustainability on Firm Value and Financial Performance in the Air Transport Industry
title_sort impact of sustainability on firm value and financial performance in the air transport industry
publisher MDPI AG
series Sustainability
issn 2071-1050
publishDate 2020-11-01
description In this study, we examine the extent to which the implementation of environmental, social, and governance (ESG) disclosures influence the firm value and financial performance of airlines. The panel data analysis is applied to the set of collected data from the Thomson Reuters Eikon database for the sample of 27 airlines worldwide from 2013 to 2019. Findings of this study support the positive relationship between the environmental pillar score (Env) and governance pillar score (Gov), with market-to-book ratio and Tobin’s Q as proxies for firm value and financial performance, respectively. This finding implies that an increase in both pillars leads to higher market value and financial efficiency for investigated airlines. Therefore, an airline’s effort to improve Env and Gov dimensions will lead to higher market value and return on invested funds. In contrast, the social pillar disclosure in both models is found to have a significant negative association with the dependent variables, showing that airlines’ social activities result in lower value as well as level of performance.
topic sustainability
firm value
financial performance
air transport industry
environmental, social and governance (ESG)
market-to-book ratio
url https://www.mdpi.com/2071-1050/12/23/9957
work_keys_str_mv AT yaghoubabdi impactofsustainabilityonfirmvalueandfinancialperformanceintheairtransportindustry
AT xiaonili impactofsustainabilityonfirmvalueandfinancialperformanceintheairtransportindustry
AT xaviercamaraturull impactofsustainabilityonfirmvalueandfinancialperformanceintheairtransportindustry
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