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Evidence of the Ιmpact of ESG Disclosures on Financial Performance Comes from Companies Listed on the London Stock Exchange's FTSE100

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  • Adel Necib
  • Anis Jarboui

Abstract

Purpose: Due to a global emphasis on sustainability, investors and other stakeholders now consider companies' transparency in ESG practices to be a critical factor. This study looks at how environmental, social, and governance (ESG) disclosures affect the financial performance of companies listed on the London Stock Exchange's FTSE100. Design/Methodology/Approach: This study uses a dynamic Generalised Method of Moments (GMM) approach to address endogeneity issues and assess the relationship between ESG disclosure and financial performance indicators, such as return on assets (ROA), return on equity (ROE), and market value. Findings: The results of analysing panel issue data from FTSE100 companies between 2015 and 2023 show that businesses with strong historical performance have a tendency to maintain their profitability. Additionally, ESG disclosure improves investor confidence and risk management, which has a favorable impact on financial results. Large corporations benefit from economies of scale, while excessive leverage reduces rentability. For instance, the expansion of the PIB is also essential to boosting an organization's profitability. Practical Implications: It is imperative that policies enforce ESG disclosure frameworks, encourage sustainable practices, and provide financial assistance to small businesses. Originality value: Encouraging responsible credit management and ensuring macroeconomic stability through advantageous commercial policies will also help to boost an organization's profitability and long-term economic growth.

Suggested Citation

  • Adel Necib & Anis Jarboui, 2025. "Evidence of the Ιmpact of ESG Disclosures on Financial Performance Comes from Companies Listed on the London Stock Exchange's FTSE100," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 204-216.
  • Handle: RePEc:ers:ijebaa:v:xiii:y:2025:i:2:p:204-216
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    References listed on IDEAS

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    1. Michael D. Bates & Leslie E. Papke & Jeffrey M. Wooldridge, 2024. "Non linear correlated random effects models with endogeneity and unbalanced panels," Econometric Reviews, Taylor & Francis Journals, vol. 43(9), pages 713-732, October.
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    Keywords

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    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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