Do ESG Risk Scores and Board Attributes Impact Corporate Performance? Evidence from Saudi-Listed Companies

Ines Chaabouni (), Noura Ben Mbarek and Ezer Ayadi
Additional contact information
Ines Chaabouni: Department of Finance, College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11552, Saudi Arabia
Noura Ben Mbarek: Department of Finance, College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11552, Saudi Arabia
Ezer Ayadi: Department of Finance, College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11552, Saudi Arabia

JRFM, 2025, vol. 18, issue 2, 1-15

Abstract: This research examines the link between environmental, social, and governance (ESG) risk ratings and board characteristics on corporate performance. Using 2023 data from 117 companies on the Saudi Stock Exchange, the study employs Ordinary Least Squares (OLS) regression and Python for data analysis. Our findings reveal a negative effect of ESG risk scores on financial performance measures, indicating that higher ESG risks hinder firm performance measured by ROE and ROIC. Furthermore, both the size and independence of the board decrease corporate performance in Saudi firms. Family-controlled ownership structures often limit the effectiveness of independent directors in enhancing performance. In Saudi firms, women’s board participation shows an insignificant impact on corporate performance, suggesting that the Tokenism Theory may apply. It is recommended that firms empower women in leadership roles and develop robust ESG risk management frameworks to mitigate risks and enhance financial performance.

Keywords: ESG risk scores; board independence; gender diversity; board size; corporate performance (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/1911-8074/18/2/83/pdf (application/pdf)
https://www.mdpi.com/1911-8074/18/2/83/ (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:2:p:83-:d:1583736

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 ().