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The Impact of ESG Scores on Company Value and Market Capitalization Volatility: An Empirical Analysis

Serkan Akbay & Alexander Maximilian Röser

Journal of Investing2026https://doi.org/10.3905/joi.2026.1.383article
AJG 1ABDC B
Weight
0.50

Abstract

This study investigates the impact of Environmental, Social, and Governance (ESG) scores on company value and market capitalization volatility in the German stock market. Using daily data from the DAX 40 index for the years 2022, 2023, and 2024, this study employs various regression models to analyze the relationship between ESG scores, market capitalization, and volatility. The results show that ESG scores have a positive influence on market capitalization in the initial pooled ordinary least squares (OLS) regression analysis, with the magnitude of the effect increasing over the three-year period. However, when controlling for company-specific characteristics using a fixed-effects regression, the influence of ESG scores on market capitalization becomes statistically insignificant. Conversely, this study finds a weak but statistically significant positive relationship between ESG scores and annual volatility, contradicting the common assumption that companies with higher ESG scores exhibit lower volatility. The analysis also reveals a size effect, with larger companies tending to have lower volatility. The study provides an up-to-date overview of the influence of sustainability on market capitalization and volatility, offering opportunities for further research by considering additional factors. These findings contribute to the ongoing debate on the financial implications of corporate sustainability practices and their impact on investor decision-making.

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https://doi.org/https://doi.org/10.3905/joi.2026.1.383

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@article{serkan2026,
  title        = {{The Impact of ESG Scores on Company Value and Market Capitalization Volatility: An Empirical Analysis}},
  author       = {Serkan Akbay & Alexander Maximilian Röser},
  journal      = {Journal of Investing},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.3905/joi.2026.1.383},
}

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F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
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R · text relevance †0.50 × 0.4 = 0.20

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