IDEAS home Printed from https://ideas.repec.org/a/wly/sustdv/v33y2025i4p6215-6227.html
   My bibliography  Save this article

Environmental Performance and Firm Value: The Moderating Role of ESG‐Executive Compensation

Author

Listed:
  • Marcel Dohrmann
  • Monica Martinez‐Blasco
  • Jordi Cuadros
  • Francesc Prior Sanz

Abstract

This paper examines the moderating role of executive compensation tied to environmental, social, and governance (ESG) metrics in the relationship between environmental performance and firm value. Data from 586 publicly listed European firms across various industries between 2016 and 2021 were analyzed using OLS regression and a series of robustness checks. Findings reveal a significant positive relationship between environmental performance and firm value within these firms. Furthermore, empirical evidence is provided proving that this relationship is strengthened when executive compensation is linked to ESG metrics. To enhance the robustness of the results, lagged variables of Tobin's Q and the generalized method of moments (GMM) were employed. This study offers valuable insights for policymakers, firms, and stakeholders regarding the strategic benefits of aligning executive compensation with ESG objectives, ultimately fostering improved environmental performance and greater firm value.

Suggested Citation

  • Marcel Dohrmann & Monica Martinez‐Blasco & Jordi Cuadros & Francesc Prior Sanz, 2025. "Environmental Performance and Firm Value: The Moderating Role of ESG‐Executive Compensation," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(4), pages 6215-6227, August.
    • Handle: RePEc:wly:sustdv:v:33:y:2025:i:4:p:6215-6227
    DOI: 10.1002/sd.3454
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/sd.3454
    Download Restriction: no
    File URL: https://libkey.io/10.1002/sd.3454?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:sustdv:v:33:y:2025:i:4:p:6215-6227. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-1719 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.