Finance

Accounting

Business

Sample (material)

Value (mathematics)

Corporate governance

Structural engineering

Biology

Market value added

Pillar

Machine learning

Engineering

Profitability index

Econometrics

Economics

Market value

Enterprise value

Chemistry

Return on assets

Ecology

Computer science

Sustainability

Industrial organization

Chromatography

Panel data

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.

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