ESG Ratings and Financial Performance in the Global Hospitality Industry

Kefan Lu, Cagri Berk Onuk, Yifei Xia and Jianing Zhang ()
Additional contact information
Kefan Lu: College of Business and Public Management, Wenzhou-Kean University, Wenzhou 325060, China
Cagri Berk Onuk: College of Business and Public Management, Wenzhou-Kean University, Wenzhou 325060, China
Yifei Xia: College of Business and Public Management, Wenzhou-Kean University, Wenzhou 325060, China
Jianing Zhang: College of Business and Public Management, Wenzhou-Kean University, Wenzhou 325060, China

JRFM, 2025, vol. 18, issue 1, 1-27

Abstract: Existing research critically examines the influence of environmental, social, and governance (ESG) ratings on corporate financial performance (CFP), with outcomes varying considerably. This study employs a dataset of publicly traded firms across 16 countries within the hospitality sector from 2005 to 2022 to examine the ESG-CFP relationship. Fixed effects regression results demonstrate a positive linkage between ESG ratings and CFP, utilizing both comprehensive ESG ratings and discrete pillar ratings. These findings remain robust across various performance measures including return on assets, return on equity, and Tobin’s Q. Heteroscedasticity and endogeneity concerns are mitigated through generalized least squares and two-stage least squares methods, respectively. Moreover, the positive impact of ESG on CFP exhibits greater potency in the United States relative to other countries and was more pronounced during the COVID-19 era. These findings offer valuable insights for business executives, investors, and policymakers in supporting ESG initiatives, guiding investment decisions, and formulating effective policy directives.

Keywords: ESG rating; corporate financial performance; hospitality sector (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1911-8074/18/1/24/pdf (application/pdf)
https://www.mdpi.com/1911-8074/18/1/24/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jjrfmx:v:18:y:2025:i:1:p:24-:d:1563402

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

More articles in JRFM from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().