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Exploring the Moderating Role of Social and Ethical Practices in the Relationship between Environmental Disclosure and Financial Performance: Evidence from ESG Companies

Author

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  • Salim Chouaibi

    (Department of Accounting, Faculty of Economics and Management of Sfax, University of Sfax, Sfax 3018, Tunisia)

  • Matteo Rossi

    (Department of Law, Economics, Management and Quantitative Methods (DEMM), University of Sannio, 82100 Benevento, Italy)

  • Dario Siggia

    (Department of Agricultural and Forest Sciences, University of Palermo, 90128 Palermo, Italy)

  • Jamel Chouaibi

    (Department of Accounting, Faculty of Economics and Management of Sfax, University of Sfax, Sfax 3018, Tunisia)

Abstract

Environmental disclosure is the latest novelty in the corporate reporting field. In fact, it is a tool that can better represent the capacity of companies in creating financial performance over time. Therefore, this paper analyzes whether environmental disclosure (ED) practiced by firms listed on the ESG index affects their financial performance (FP) using the moderating effect of social and ethical practices. The analysis includes a linear regression using panel data from Thomson Reuters and Bloomberg databases. Panel data were collected from a sample of 523 companies listed on the North American and West European stock exchanges. The obtained results show a positive and significant relationship between environmental disclosure (ED) and financial performance (FP). This implies that a strong environmental disclosure increases financial performance while a weak one decreases it. Furthermore, the study suggests a moderating effect of social and ethical practices in the link between environmental disclosure and the firm’s financial performance. In fact, these findings provide interesting insights for academic practitioners and regulators who are interested in discovering environmental disclosure, firm’s performance, and social and ethical practices. These findings also provide insights to stakeholders and regulators on the crucial need to integrate more social and environmental regulations to promote sustainability. Moreover, this paper fills the gaps existing in previous studies that ignore the moderating role of social and ethical practices in the relationship between environmental disclosure and financial performance.

Suggested Citation

  • Salim Chouaibi & Matteo Rossi & Dario Siggia & Jamel Chouaibi, 2021. "Exploring the Moderating Role of Social and Ethical Practices in the Relationship between Environmental Disclosure and Financial Performance: Evidence from ESG Companies," Sustainability, MDPI, vol. 14(1), pages 1-17, December.
    • Handle: RePEc:gam:jsusta:v:14:y:2021:i:1:p:209-:d:711368
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    References listed on IDEAS

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    1. James N. Cannon & Zhejia Ling & Qian Wang & Olena V. Watanabe, 2020. "10-K Disclosure of Corporate Social Responsibility and Firms’ Competitive Advantages," European Accounting Review, Taylor & Francis Journals, vol. 29(1), pages 85-113, January.
    2. Juan Herrera & Carlos de las Heras-Rosas, 2020. "Corporate Social Responsibility and Human Resource Management: Towards Sustainable Business Organizations," Sustainability, MDPI, vol. 12(3), pages 1-24, January.
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    Cited by:

    1. Abdalwali Lutfi & Hamza Alqudah & Mahmaod Alrawad & Ahmad Farhan Alshira’h & Malek Hamed Alshirah & Mohammed Amin Almaiah & Adi Alsyouf & Mohammed Faisal Hassan, 2023. "Green Environmental Management System to Support Environmental Performance: What Factors Influence SMEs to Adopt Green Innovations?," Sustainability, MDPI, vol. 15(13), pages 1-20, July.
    2. Weizhou Su & Nieping Wei & Zihan Yuan & Sidai Guo, 2023. "The Impact of Environmental Information Disclosure on the Efficiency of Enterprise Capital Allocation," Sustainability, MDPI, vol. 15(14), pages 1-19, July.
    3. Wang, Junwei & Xing, Yafei & Xiao, Daibo, 2025. "An empirical study on the relationship between executives' financial background and corporate ESG performance," International Review of Financial Analysis, Elsevier, vol. 102(C).
    4. Xiaowei Ding & Lyu Ye & Yueying Yang & Olga Efimova & Alina Steblyanskaya & Junfeng Zhang, 2022. "The Impact Mechanism of Environmental Information Disclosure on Corporate Sustainability Performance—Micro-Evidence from China," Sustainability, MDPI, vol. 14(19), pages 1-22, September.
    5. Hong Zhang & Jiehua Liu & He Jiang, 2025. "The Impact of Enterprise Digital Transformation on ESG Performance: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(5), pages 3157-3171, July.
    6. Muhammad Kashif Ali & Muhammad Khurram Zahoor & Asif Saeed & Safia Nosheen, 2023. "Moderating effect of vertical integration on the relationship between sustainability and performance: evidence from oil and gas energy sector," Future Business Journal, Springer, vol. 9(1), pages 1-11, December.
    7. Miao Li & Rajah Rasiah, 2024. "Can ESG Disclosure Stimulate Corporations’ Sustainable Green Innovation Efforts? Evidence from China," Sustainability, MDPI, vol. 16(21), pages 1-20, October.

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