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Investment efficiency and ESG performance: Does board governance matter?

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Listed:
  • Wang, Guan
  • Zhang, Mengchen
  • Ji, Zihao
  • Qian, Junwei

Abstract

Drawing on panel data covering U.S. listed companies between 2017 and 2023, the analysis finds that better investment efficiency leads to enhanced ESG performance. Results show that firms with higher investment efficiency tend to achieve better ESG outcomes. Board governance, specifically gender diversity, average age, and the proportion of non-executive directors, positively moderates this relationship. These findings highlight the importance of governance structures in aligning financial discipline with sustainability goals. By bridging corporate finance and ESG literature, the study provides insights for managers and policymakers on leveraging governance to enhance the ESG impact of capital allocation.

Suggested Citation

  • Wang, Guan & Zhang, Mengchen & Ji, Zihao & Qian, Junwei, 2025. "Investment efficiency and ESG performance: Does board governance matter?," Finance Research Letters, Elsevier, vol. 85(PB).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pb:s1544612325012401
    DOI: 10.1016/j.frl.2025.107982
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