%T The effect of ESG performance on the financial performance of US REITs
%A S.K. Geres
%D 2023
%L theses_frw4111
%X This study investigates the relationship of Environmental, Social and Governance (ESG) performance on the financial performance of US Real Estate Investment Trusts for the 2012-2020 period. Despite a large body of research in the finance literature, empirical studies on ESG and financial performance in the real estate sector are still scarce. In general, the results suggest that there is no significant relationship between ESG and operating performance, and between ESG and stock performance. However, we find a significant negative relationship between lagged ESG performance and the relative market value measured by the natural logarithm of Tobin’s Q. Furthermore, we find a significant positive relationship between the year-over-year change in ESG score and market value. Further in-depth analysis shows us that the year-over-year changes in governance and social scores are the main drivers.