Does corporate financial performance promote ESG: Evidence from US firms

Khalfaoui Hamdi, Hassan Guenich and Moufida Ben Saada

Cogent Business & Management, 2022, vol. 9, issue 1, 2154053

Abstract: Studying Corporate Environmental, Social and Governance responsibility (ESG) and its consequences remain a topical concern of the company’s stakeholders including governmental and non-governmental organizations, investors and researchers over the past few decades. While most research has studied and validated the beneficial effect of ESG on financial performance. The few studies that have explored the nexus between financial performance and ESG relationship are conducted in a double causality framework. Thus, this research fills this gap by studying the effect of financial performance on ESG. Using a random-effects panel data model for more than 10,000 firm-year observations of 504 U.S. firms during the period 2000–2020, the results show a positive relationship between financial performance and ESG. Furthermore, cash holding, minority interest and inflation have significantly the expected sign. Yet, the market-to-book value seems insignificant. Interestingly, during periods of high economic policy uncertainty, oil price uncertainty and leverage, the impact of companies’ financial performance on ESG decreases differently according to the three components of the ESG. These findings are robust and consistent with alternative econometric specifications and alternative measures of dependent variable and control variables.

Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://hdl.handle.net/10.1080/23311975.2022.2154053 (text/html)
Access to full text is restricted to subscribers.

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:taf:oabmxx:v:9:y:2022:i:1:p:2154053

Ordering information: This journal article can be ordered from
http://cogentoa.tandfonline.com/journal/OABM20

DOI: 10.1080/23311975.2022.2154053

Access Statistics for this article

Cogent Business & Management is currently edited by Len Tiu Wright and Tahir Nisar

More articles in Cogent Business & Management from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().