Esg factors and corporate performance: a panel data analysis of European and American automotive companies

The objective of this research is to investigate how ESG practices affect corporate value in a sector particularly exposed to sustainability challenges, namely the automotive industry. The thesis presents a comparison between Europe and the United States regarding the influence of ESG (Environmental, Social, Governance) factors on corporate financial performance (CFP) within the automotive sector. After the literature review of the main ESG regulatory frameworks in both European and American contexts, a theoretical framework is presented to define the concept of corporate value and the way ESG practices can be evaluated. Empirical analysis was conducted using PanelOLS models with Tobin’s Q and ROA as dependent variables. The models were estimated in both aggregated and disaggregated form, in order to better evaluate the influence of the ESG factors on CFP. The dataset was obtained from Bloomberg and includes lagged variables (one- and two-year lags). Results highlight significant territorial differences: in Europe, the Environmental dimension emerges as the main driver recognized by the market, while in the USA the Social dimension appears more relevant, although it is associated with a reduction in profitability without a significant reward from the market. The Governance dimension did not emerge as a significant in either Europe or the USA. Overall, results indicate that the integration of ESG into a firm’s strategy must take into account three key aspects: the geographical dimension, the time horizon, and the distinction between accounting-based and market-based indicators. Managerial implications suggest that, for European automotive firms, environmental investments could represent a strategic option able to increase corporate reputation and attract more responsible investors. On the other side, in the United States, ESG initiatives require a more transparent communication and clearer measurement systems in order to increase their perceived value. It is important to consider that results should be read considering the limitations of the sample and the period analyzed (2018–2022). Moreover, the impact of the Covid-19 pandemic on the market has to be noted. Further research will be necessary to verify if observed dynamics persist over longer periods, larger samples, and in light of evolving ESG disclosure standards.