Financing Sustainable Entrepreneurship: ESG Measurement, Valuation, and Performance

23 Pages Posted: 1 Jan 2022 Last revised: 23 Sep 2022

See all articles by Sasan Mansouri

Sasan Mansouri

Goethe University Frankfurt - Department of Finance

Paul P. Momtaz

University of California, Los Angeles (UCLA) - Anderson School of Management; Technische Universität München (TUM) - TUM School of Management; University College London Center for Blockchain Technologies

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Date Written: December 31, 2021

Abstract

Sustainability orientation has a positive effect on startups’ initial valuation and a negative effect on their post-funding financial performance. All else equal, improving sustainability orientation by one standard deviation increases startups’ funding amount by 28% and decreases investors’ abnormal returns per post-funding year by 16%. The results hold in a large sample of blockchain-based crowdfunding campaigns, also known as Initial Coin Offerings (ICOs) or token offerings. A key contribution is a machine-learning approach to assess startups’ Environment, Society and Governance (ESG) properties from textual data, which we make readily available at www.SustainableEntrepreneurship.org.

Keywords: Sustainable Entrepreneurship, Sustainability, ESG, Token Offering, Initial Coin Offering (ICO), Crowdfunding, Entrepreneurial Finance, Machine Learning

JEL Classification: L26, M13, Q01, Q56

Suggested Citation

Mansouri, Sasan and Momtaz, Paul P., Financing Sustainable Entrepreneurship: ESG Measurement, Valuation, and Performance (December 31, 2021). Journal of Business Venturing, Vol. 37, No. 6, 2022, Available at SSRN: https://ssrn.com/abstract=3997723 or http://dx.doi.org/10.2139/ssrn.3997723

Sasan Mansouri

Goethe University Frankfurt - Department of Finance ( email )

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Germany
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HOME PAGE: http://www.sasanm.de

Paul P. Momtaz (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Technische Universität München (TUM) - TUM School of Management ( email )

Arcisstr. 21
Munich, 80333
Germany

University College London Center for Blockchain Technologies ( email )

UCL CBT UCL Computer Science
Malet Place London WC
London, London
United Kingdom

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