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American Corporate Sustainability and Extra-Financial Performance: Is There an Inverted-U Relationship

Author

Listed:
  • Nahed Zghidi

    (Commercial High School of Sfax, University of Sfax, Airport Road Km 4.5, BP 1081, Sfax 3018, Tunisia)

  • Rihab Bousnina

    (Faculty of Economics and Management of Sfax, University of Sfax, Airport Road Km 4, BP 1088, Sfax 3018, Tunisia)

  • Samarkand Mokni

    (Faculty of Economics and Management of Sfax, University of Sfax, Airport Road Km 4, BP 1088, Sfax 3018, Tunisia)

Abstract

In this paper, we explore the nexus between extra-financial performance (sustainable ESG) and firm performance within a sample of American firms from different vital sectors. In particular, we examine whether extra-financial performance has an effect on company performance. To this end, we have used a non-linear model. The study is based on a sample of 93 American companies over the period 2010–2019. We find that the association between extra-financial performance and firms’ financial performance is nonlinear, exhibiting an inverted U-shaped pattern. In particular, the results emphasize the importance of caution when pursuing ESG initiatives. Enterprise managers should monitor the effect of ESG activities on extra-financial performance and confirm the ESG threshold of their organization.

Suggested Citation

  • Nahed Zghidi & Rihab Bousnina & Samarkand Mokni, 2023. "American Corporate Sustainability and Extra-Financial Performance: Is There an Inverted-U Relationship," JRFM, MDPI, vol. 16(10), pages 1-18, October.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:10:p:435-:d:1254304
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    References listed on IDEAS

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