Governance Moderation in ESG Impact: Market Value Shifts Pre- and Post-COP 21 in the Oil and Gas Sector

This study examines the effect of ESG performance on firm market value in the oil and gas sector, using 6,872 firm-year observations from 52 countries (2011–2022). A two-stage least squares (2SLS) regression is employed to address endogeneity, with institutional governance government effectiveness, regulatory quality, and control of corruption tested as moderators. Results show ESG positively impacts firm value only after COP21. Institutional quality enhances firm value but weakens ESG’s marginal effect. The findings highlight the conditional nature of ESG’s value relevance and offer implications for firms, investors, and policymakers in varying governance contexts.