Exploring the Moderating Role of Social and Ethical Practices in the Relationship between Environmental Disclosure and Financial Performance: Evidence from ESG Companies

Salim Chouaibi, Matteo Rossi, Dario Siggia and Jamel Chouaibi
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Salim Chouaibi: Department of Accounting, Faculty of Economics and Management of Sfax, University of Sfax, Sfax 3018, Tunisia
Matteo Rossi: Department of Law, Economics, Management and Quantitative Methods (DEMM), University of Sannio, 82100 Benevento, Italy
Dario Siggia: Department of Agricultural and Forest Sciences, University of Palermo, 90128 Palermo, Italy
Jamel Chouaibi: Department of Accounting, Faculty of Economics and Management of Sfax, University of Sfax, Sfax 3018, Tunisia

Sustainability, 2021, vol. 14, issue 1, 1-17

Abstract: Environmental disclosure is the latest novelty in the corporate reporting field. In fact, it is a tool that can better represent the capacity of companies in creating financial performance over time. Therefore, this paper analyzes whether environmental disclosure (ED) practiced by firms listed on the ESG index affects their financial performance (FP) using the moderating effect of social and ethical practices. The analysis includes a linear regression using panel data from Thomson Reuters and Bloomberg databases. Panel data were collected from a sample of 523 companies listed on the North American and West European stock exchanges. The obtained results show a positive and significant relationship between environmental disclosure (ED) and financial performance (FP). This implies that a strong environmental disclosure increases financial performance while a weak one decreases it. Furthermore, the study suggests a moderating effect of social and ethical practices in the link between environmental disclosure and the firm’s financial performance. In fact, these findings provide interesting insights for academic practitioners and regulators who are interested in discovering environmental disclosure, firm’s performance, and social and ethical practices. These findings also provide insights to stakeholders and regulators on the crucial need to integrate more social and environmental regulations to promote sustainability. Moreover, this paper fills the gaps existing in previous studies that ignore the moderating role of social and ethical practices in the relationship between environmental disclosure and financial performance.

Keywords: financial performance; environmental disclosure; environmental, social and governance (ESG); business ethics (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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