ESG Controversies and the Financial Performance of MENA Firms: The Moderating Role of Board Characteristics

Bashar Abu Khalaf (), Munirah Sarhan Alqahtani and Maryam Saad Al-Naimi
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Bashar Abu Khalaf: Accounting & Finance Department, University of Doha for Science & Technology, Doha P.O. Box 24449, Qatar
Munirah Sarhan Alqahtani: Business School, Imam Mohammad Ibn Saud Islamic University, Riyadh 11564, Saudi Arabia
Maryam Saad Al-Naimi: Accounting & Finance Department, University of Doha for Science & Technology, Doha P.O. Box 24449, Qatar

Sustainability, 2025, vol. 17, issue 11, 1-22

Abstract: This paper empirically investigates the moderating role of the firm’s board characteristics in the relationship between ESG controversies and firm performance. The collected sample includes 461 non-financial companies in 10 MENA countries from 2010 to 2023. Data were collected from Refinitiv Eikon Platform (LSEG). This empirical paper applied panel GMM regression to estimate the relationship. The paper controls for firm characteristics such as firm size and leverage while controlling for macroeconomic variables such as inflation and GDP. The results indicate that there is a negative impact of ESG controversies on the performance of firms in the MENA region. Moreover, the analysis of corporate governance’s moderating role reveals that both board independence and gender diversity substantially diminish the adverse effects of ESG controversies on firm performance, indicating that well-governed firms are more adept at mitigating risks linked to ESG-related controversies. Our results hold based on the robustness of the results.

Keywords: ESG controversies; financial performance; corporate governance; panel GMM; MENA (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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