The sustainability reporting-firm performance nexus: evidence from a threshold model

Bansal, Manish; Samad, Taab Ahmad; Bashir, Hajam Abid

doi:10.1108/jgr-05-2021-0049

Cited by 34 publications

(38 citation statements)

References 89 publications

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“…Friede et al (2015) argued that the relationship between ESG performance and corporate financial performance dates back to the 1970s, and since then, more than 2,000 empirical studies have been published. Bansal et al (2021) identified three streams of research in this debate. Each stream argues that the correlation between ESG and financial performance is different – positive, negative or non-significant.…”

Section: Theoretical Background and Hypothesis Developmentmentioning

confidence: 99%

“…Scholars in the first research stream (positive correlation) argue that acting in a socially and environmentally responsible manner is not significantly costly and that firms can benefit financially from their social and environmental responsibilities (McGuire et al , 1988). According to these studies, superior EGS performance positively affects stakeholders’ views of the company, increasing market value (Bansal et al , 2021). Departing from value-creation theory, they claimed that superior ESG performance can lead to a competitive advantage (Bansal et al , 2021).…”

Section: Theoretical Background and Hypothesis Developmentmentioning

confidence: 99%

“…The complexity of sustainability efforts may involve financial trade-offs and hinder a company’s short-term financial goals (Bocken and Geradts, 2020). The picture becomes even more complex, as the financial benefits of addressing sustainability are questioned, and business practitioners raise the vital question of whether delivering superior ESG performance pays off financially (Bansal et al , 2021).…”

Section: Introductionmentioning

confidence: 99%

“…As firms shift their focus from profit maximization to non-financial metrics, the economic viability of such a shift is debated (Auer and Schuhmacher, 2016). Multiple studies have focused on this debate, anchoring it in multiple perspectives, such as: the impact of CSR performance on the financial and stock market performance of a company (Abrams et al , 2021); the financial impacts of the overall ESG performance of companies (Bansal et al , 2021); the financial impacts of superior performance on each of the three ESG components separately (Velte, 2017, 2019); and analyzing ESG performance and its financial impact in the presence of mediating and moderating factors (Agyemang and Ansong, 2017). …”

Section: Introductionmentioning

confidence: 99%

“…The financial implications of superior CSR and ESG performance have been investigated in multiple geographical areas, including the USA, Europe, Asia and Africa (Aboud and Diab, 2019). Although numerous studies have investigated the ESG performance–financial performance link across multiple geographical areas and stock exchanges, the overall results remain inconsistent, leading to contradictory evidence (Bansal et al , 2021). Such confusion in the empirical evidence may contribute to hesitation by business practitioners to shake off their existing business models and address sustainability.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Does it pay to deliver superior ESG performance? Evidence from US S&P 500 companies

Ademi

Klungseth

2022

JGR

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Purpose The purpose of this paper is to investigate the relationship between a company’s environmental, social and governance (ESG) performance and its financial performance. This paper also investigates the relationship between ESG performance and a company’s market valuation. This paper provides convincing empirical evidence that delivering superior ESG performance pays off financially. Design/methodology/approach The financial data and ESG scores of 150 publicly traded companies listed in the Standard and Poor’s 500 index for 2017–2020, comprising 5,750 observations, were collected. STATA was used to run a fixed-effect regression and a weighted least squares model to analyze the panel data. Findings The results of the empirical analysis suggest that companies with superior ESG performance perform better financially and are valued higher in the market compared to their industry peers. The ESG rating score impacts both return-on-capital-employed as a proxy for financial performance and Tobin’s Q as a proxy for the market valuation of a company. Originality/value This study contributes to the existing research on ESG performance and financial performance relationship by providing empirical evidence to resolve confusion in the existing literature caused by contradictory evidence. Taking advantage of worldwide crisis caused by the COVID-19 pandemic, this study shows that a positive relationship between ESG performance and a company’s market valuation holds even during times of unexpected crises. Further, this study contributes to business practitioners’ knowledge by showing that ESG aspects constitute highly relevant non-financial information that impact the market’s perception of a company and that investing in sustainability positively impacts a company’s bottom line.

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Section: Theoretical Background and Hypothesis Developmentmentioning

confidence: 99%

Section: Theoretical Background and Hypothesis Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Does it pay to deliver superior ESG performance? Evidence from US S&P 500 companies

Ademi

Klungseth

2022

JGR

View full text Add to dashboard Cite

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The impact of green innovation on sustainability and financial performance: Evidence from the Jordanian financial sector

Srouji,

Hamdallah,

Al‐Hamadeen

et al. 2023

Bus Strat Dev

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The purpose of this study is to examine the relationship between sustainability performance (SP) and financial performance (FP), based on performance disclosures (reporting) of the Jordanian financial sector for the period of 2017–2020. The study employs green innovation (GI) indicators as moderating and mediating variables; by using hierarchical regression; as means of unlocking and examining the relationship between SP and FP; through the lens of the stakeholder theory. The hierarchical regression findings suggest that GI indicators partially mediate the relationship between SP and FP, but do not demonstrate a moderating effect. As a main result, it is indicated that Jordanian financial institutions may use SP transparency indicators as an incentive variable, which could influence their overall FP. The research also contributes to the existing literature by adding insight into the use of GI indicators in a developing country and the potential impact on financial institutions markets. These findings lend empirical credence to the generally held belief that increase disclosure benefits for both internal and external users.

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Sustainability practices and firm performance: The moderating role of firm‐, industry‐, and country‐level factors

Siregar,

Mita,

Amarullah

et al. 2024

Bus Strat Dev

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The purpose of this study is to examine the effect of sustainability practices on firm performance and the moderating role of firm, industry, and country‐level factors on that association. The samples of our study are listed firms in ASEAN 5 (Indonesia, Singapore, Malaysia, Thailand, and the Philippines), with total observations are 1069 from the years 2004–2019. We use regression analysis to test our hypotheses. We find that sustainability performance has a significant positive association with firm performance, which supports our prediction. By engaging in socially responsible activities, companies can gain trust and loyalty from customers and other stakeholders, maintain their competitive advantage, and thus higher financial performance. However, there are no significant differences in the financial performance between firms that issue stand‐alone sustainability reports and those that do not. We cannot find any significant moderating role of the firm, industry‐, and country‐level factors on the association between sustainability practices and firm performance. We have not found any extant studies that have examined firm‐, industry‐, and country‐level factors simultaneously on the association between sustainability practices and firm performance. Our study also contributes to a better understanding of the impact of sustainability practices on firm performance in ASEAN, where sustainability practices are expected to be in greater demand than in mature markets due to the higher social and environmental concerns in such regions.

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The sustainability reporting-firm performance nexus: evidence from a threshold model

Cited by 34 publications

References 89 publications

Does it pay to deliver superior ESG performance? Evidence from US S&P 500 companies

Does it pay to deliver superior ESG performance? Evidence from US S&P 500 companies

The impact of green innovation on sustainability and financial performance: Evidence from the Jordanian financial sector

Sustainability practices and firm performance: The moderating role of firm‐, industry‐, and country‐level factors

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