Effect of Accounting and ESG Controversies on Financial Performance: Moderating Effect of ESG

Kemal Çek

Fiscaoeconomia, 2025, issue 2

Abstract: This study unveils the crucial impact of ESG (Environmental, Social and Governance) performance on controversies and the firm performance nexus for companies listed in S&P1500. We measure firm performance regarding market-based (Tobin’s Q) and profitability-based (ROA) performance, while controversies are gauged by accounting and ESG-related issues. To achieve the highest level of accuracy, we employ the System Generalized Method of Moments (GMM) estimation to address for endogeneity. The key findings reveal a positive interaction effect between lagged ESG and controversies about market-based performance. However, lagged ESG does not significantly impact profitability-based performance measures in the context of controversies.

Keywords: Accounting Controversies; ESG Controversies; ESG; Market Based Performance; Profitability Based Performance (search for similar items in EconPapers)
JEL-codes: G30 M41 Q50 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:fis:journl:250226

DOI: 10.25295/fsecon.1556525

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