Moussa, Ahmed Saber, Elmarzouky, Mahmoud and Shohaieb, Doaa (2024). Green Governance: How ESG Initiatives Drive Financial Performance in UK Firms? Sustainability, 16 (24),
Abstract
In this research endeavor, we investigate the potential influence exerted by ESG performance on the market capitalization of non-financial corporations included within the UK FTSE All-Share Index during the eleven-year period spanning 2010 to 2021. Integrating insights from Resource-Based View and Stakeholder Theory, this research extends the literature by considering the moderating effect of governance on the ESG–market capitalization association. This study analyzes a comprehensive dataset of UK firms, employing robust econometric techniques to substantiate its conclusions. The results demonstrate a robust positive association between the overall ESG pillars and market capitalization. Environmental, social, and governance performances independently contribute to an increased market value. The analysis reveals that firms with superior internal governance structures, characterized by the presence of independent board members, board size, an independent audit committee, and the implementation of a split CEO–chair structure, experience a magnified positive impact from ESG disclosures on market capitalization. Effective governance mechanisms enhance the credibility and effectiveness of ESG initiatives, aligning them with stakeholder expectations and regulatory standards. This alignment fosters trust and cooperation, driving better financial performance and increasing market value. This research adds its voice to the increasingly compelling body of evidence that underscores the financial advantages associated with ESG integration and highlights the critical role of internal governance in amplifying these benefits. The findings have significant implications for policymakers, investors, and corporate managers. They advocate for the strategic incorporation of ESG criteria into corporate governance frameworks to achieve sustainable financial success.
Publication DOI: | https://doi.org/10.3390/su162410894 |
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Divisions: | College of Business and Social Sciences > Aston Business School College of Business and Social Sciences College of Business and Social Sciences > Aston Business School > Marketing & Strategy Aston University (General) |
Additional Information: | Copyright © 2024 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/). |
Uncontrolled Keywords: | ESG,market capitalization,financial performance,internal governance,resource-based view,stakeholder theory,sustainability |
Publication ISSN: | 2071-1050 |
Data Access Statement: | The data presented in this study are available on request from the<br/>corresponding author. The article makes use of existing (secondary) data |
Last Modified: | 27 Mar 2025 08:11 |
Date Deposited: | 07 Jan 2025 14:53 |
Full Text Link: | |
Related URLs: |
https://www.mdp ... 050/16/24/10894
(Publisher URL) |
PURE Output Type: | Article |
Published Date: | 2024-12 |
Published Online Date: | 2024-12-12 |
Accepted Date: | 2024-12-04 |
Authors: |
Moussa, Ahmed Saber
Elmarzouky, Mahmoud Shohaieb, Doaa ( ![]() |