Do environmental, social, and governance activities improve corporate financial performance?

Research output: Contribution to journalArticlepeer-review

191 Citations (Scopus)


This study investigated the relationship between corporate efficiency and corporate sustainability to determine whether firms concerned about environmental, social, and governance (ESG) issues can also be efficient and profitable. We applied data envelopment analysis to estimate corporate efficiency and investigated the nonlinear relationship between corporate efficiency and ESG disclosure. Evidence shows that corporate transparency regarding ESG information has a positive association with corporate efficiency at the moderate disclosure level, rather than at the high or low disclosure level. Governance information disclosure has the strongest positive linkage with corporate efficiency, followed by social and environmental information disclosure. Moreover, we explored the relationship between particular ESG activities and corporate financial performance (CFP), including corporate efficiency, return on assets, and market value. We found that most of the ESG activities reveal a nonnegative relationship with CFP. These findings may provide evidence about voluntary corporate social responsibility strategy choices for enhancing corporate sustainability.

Original languageEnglish
Pages (from-to)286-300
Number of pages15
JournalBusiness Strategy and the Environment
Issue number2
Publication statusPublished - Feb 1 2019

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Geography, Planning and Development
  • Strategy and Management
  • Management, Monitoring, Policy and Law


Dive into the research topics of 'Do environmental, social, and governance activities improve corporate financial performance?'. Together they form a unique fingerprint.

Cite this