The Impact of ESG and Board Gender Diversity on Company Performance

Abstract

This study explores the impact of ESG scores and board gender diversity on the financial performance of companies listed on the OMX Stockholm Stock Exchange. To measure company performance, annualized stock return was used as a proxy. Panel data regression was conducted on a dataset spanning ten years to determine how these factors, both individually and together, influence our dependent variable. The findings reveal a significant positive effect when ESG scores and board gender diversity are both high, despite each factor alone tending to correlate negatively with stock performance. This indicates that combining ESG practices with diverse leadership can reduce their individual negative impacts. The study also shows that larger companies face a less positive impact compared to smaller companies, likely due to adjustment difficulties and compliance costs. These insights are valuable for policymakers and corporate leaders aiming to balance profit and sustainability. While the research provides important findings, it has limitations such as data constraints and variability in ESG reporting. Future research with more comprehensive data and advanced methods could further clarify these relationships.