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Effect of Accounting and ESG Controversies on Financial Performance: Moderating Effect of ESG

Author

Listed:
  • Kemal ÇEK

Abstract

This study unveils the crucial impact of ESG (Environmental, Social and Governance) performance on controversies and the firm performance nexus for companies listed in S&P1500. We measure firm performance regarding market-based (Tobin’s Q) and profitability-based (ROA) performance, while controversies are gauged by accounting and ESG-related issues. To achieve the highest level of accuracy, we employ the System Generalized Method of Moments (GMM) estimation to address for endogeneity. The key findings reveal a positive interaction effect between lagged ESG and controversies about market-based performance. However, lagged ESG does not significantly impact profitability-based performance measures in the context of controversies.

Suggested Citation

  • Kemal ÇEK, 2025. "Effect of Accounting and ESG Controversies on Financial Performance: Moderating Effect of ESG," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 2.
    • Handle: RePEc:fis:journl:250226
    DOI: 10.25295/fsecon.1556525
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    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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