IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i6p2459-d1357859.html
   My bibliography  Save this article

Unveiling the Impacts of Corporate Environmental, Social, and Governance Disclosure

Author

Listed:
  • Nguyen Thi Thanh Binh

    (Department of Accounting, Chaoyang University of Technology, Taichung 413310, Taiwan)

  • Hung-Chang Lee

    (Department of Accounting, Chaoyang University of Technology, Taichung 413310, Taiwan)

Abstract

Amidst heightened scrutiny of corporate environmental, social, and governance (ESG) practices, this study employs threshold techniques combined with artificial neural networks to examine the impact of ESG disclosure on companies, emphasizing its pivotal role in promoting sustainability. Analyzing data from Taiwan’s 20 industries from 2012 to 2022, it finds that while ESG engagement positively influences financial performance, it also underscores the vital connection between corporate practices and sustainable development. This analysis explores the relationship between carbon emissions, operating expenses, and financial performance in the overall sample and a threshold sample based on a threshold variable. In the overall sample, carbon emissions significantly increase operating expenses, accompanied by other influential variables. Introducing a threshold value of firm size alters the dynamics, showing a positive and more pronounced impact in the threshold sample. The examination of financial performance metrics reveals significant positive associations with carbon emissions, particularly when the threshold is not met or exceeded. Intriguingly, subgroup analysis indicates a negative association between carbon emissions and financial performance within the larger-size subgroup, in stark contrast to a more pronounced positive relationship observed in the smaller-size subgroup. Furthermore, the developed ANN model exhibits robust learning capabilities, underscoring its efficacy in capturing complex patterns within the data. It suggests its potential as a reliable tool for accurately predicting carbon emissions across diverse scenarios, facilitating informed decision-making and policy formulation to mitigate environmental impact.

Suggested Citation

  • Nguyen Thi Thanh Binh & Hung-Chang Lee, 2024. "Unveiling the Impacts of Corporate Environmental, Social, and Governance Disclosure," Sustainability, MDPI, vol. 16(6), pages 1-17, March.
  • Handle: RePEc:gam:jsusta:v:16:y:2024:i:6:p:2459-:d:1357859
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/6/2459/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/16/6/2459/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sandra A. Waddock & Samuel B. Graves, 1997. "The Corporate Social Performance–Financial Performance Link," Strategic Management Journal, Wiley Blackwell, vol. 18(4), pages 303-319, April.
    2. Tobias Hahn & Frank Figge, 2011. "Beyond the Bounded Instrumentality in Current Corporate Sustainability Research: Toward an Inclusive Notion of Profitability," Journal of Business Ethics, Springer, vol. 104(3), pages 325-345, December.
    3. Roszaini Haniffa & Mohammad Hudaib, 2006. "Corporate Governance Structure and Performance of Malaysian Listed Companies," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(7‐8), pages 1034-1062, September.
    4. Bruce E. Hansen, 2000. "Sample Splitting and Threshold Estimation," Econometrica, Econometric Society, vol. 68(3), pages 575-604, May.
    5. Jushan Bai & Pierre Perron, 2003. "Critical values for multiple structural change tests," Econometrics Journal, Royal Economic Society, vol. 6(1), pages 72-78, June.
    6. Guangyou Zhou & Lian Liu & Sumei Luo, 2022. "Sustainable development, ESG performance and company market value: Mediating effect of financial performance," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 3371-3387, November.
    7. Hong, Harrison & Kacperczyk, Marcin, 2009. "The price of sin: The effects of social norms on markets," Journal of Financial Economics, Elsevier, vol. 93(1), pages 15-36, July.
    8. Bryan W. Husted & José De Jesus Salazar, 2006. "Taking Friedman Seriously: Maximizing Profits and Social Performance," Journal of Management Studies, Wiley Blackwell, vol. 43(1), pages 75-91, January.
    9. Jędrzej Białkowski & Laura T. Starks, 2016. "SRI Funds: Investor Demand, Exogenous Shocks and ESG Profiles," Working Papers in Economics 16/11, University of Canterbury, Department of Economics and Finance.
    10. Roszaini Haniffa & Mohammad Hudaib, 2006. "Corporate Governance Structure and Performance of Malaysian Listed Companies," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(7-8), pages 1034-1062.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Elena Platonova & Mehmet Asutay & Rob Dixon & Sabri Mohammad, 2018. "The Impact of Corporate Social Responsibility Disclosure on Financial Performance: Evidence from the GCC Islamic Banking Sector," Journal of Business Ethics, Springer, vol. 151(2), pages 451-471, August.
    2. Ailing Xu & Yuanyuan Su & Yingxin Wang, 2024. "A Study of the Impact Mechanism of Corporate ESG Performance on Surplus Persistence," Sustainability, MDPI, vol. 16(17), pages 1-21, August.
    3. Ebrahim, Ahmed & Fattah, Tarek Abdel, 2015. "Corporate governance and initial compliance with IFRS in emerging markets: The case of income tax accounting in Egypt," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 24(C), pages 46-60.
    4. Kamini Gupta & Donal Crilly & Thomas Greckhamer, 2020. "Stakeholder engagement strategies, national institutions, and firm performance: A configurational perspective," Strategic Management Journal, Wiley Blackwell, vol. 41(10), pages 1869-1900, October.
    5. Martin Kyere & Marcel Ausloos, 2021. "Corporate governance and firms financial performance in the United Kingdom," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 1871-1885, April.
    6. Gu, Leilei & Liu, Zhongyang & Xu, Danyang, 2023. "The risk-mitigating role of corporate social responsibility in Chinese listed heavy-polluting companies: An extreme event experience perspective," Energy Economics, Elsevier, vol. 125(C).
    7. Emmanuel Chuke Nwude & Musa Sani Zakirai & Comfort Amaka Nwude, 2023. "Ownership Structure and Bank Performance in Emerging Market Economy: Evidence From Nigerian Listed Deposit Money Banks," SAGE Open, , vol. 13(4), pages 21582440231, December.
    8. Kim, Taeyeon & Kim, Hyun-Dong & Park, Kwangwoo, 2020. "CEO inside debt holdings and CSR activities," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 508-529.
    9. Mousa Sharaf Adin Hezam Saleh & Yusnidah Ibrahim & Hanita Kadir Shahar, 2020. "The Simultaneous Effect of Corporate Ownership on Dividends and Capital Structure: Malaysian Evidence," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(6), pages 46-62, December.
    10. Rimon Emile & Aiman Ragab & Sandy Kyaw, 2014. "The Effect of Corporate Governance on Firm Performance, Evidence from Egypt," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(12), pages 1865-1877, December.
    11. Ali Uyar & Cemil Kuzey & Merve Kilic & Abdullah S. Karaman, 2021. "Board structure, financial performance, corporate social responsibility performance, CSR committee, and CEO duality: Disentangling the connection in healthcare," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(6), pages 1730-1748, November.
    12. Trang Cam Hoang & Indra Abeysekera & Shiguang Ma, 2018. "Board Diversity and Corporate Social Disclosure: Evidence from Vietnam," Journal of Business Ethics, Springer, vol. 151(3), pages 833-852, September.
    13. Abdullah A K Alkhawaldeh & Jamil J Jaber & Dalila Boughaci & Noriszura Ismail, 2021. "A novel investigation of the influence of corporate governance on firms’ credit ratings," PLOS ONE, Public Library of Science, vol. 16(5), pages 1-21, May.
    14. Champagne, Claudia & Coggins, Frank & Sodjahin, Amos, 2022. "Can extra-financial ratings serve as an indicator of ESG risk?," Global Finance Journal, Elsevier, vol. 54(C).
    15. Ferriani, Fabrizio, 2023. "Issuing bonds during the Covid-19 pandemic: Was there an ESG premium?," International Review of Financial Analysis, Elsevier, vol. 88(C).
    16. Larcker, David F. & Watts, Edward M., 2020. "Where's the greenium?," Journal of Accounting and Economics, Elsevier, vol. 69(2).
    17. Ayodeji Matthew Adejuwon & Felix Olurankinse & Olugbenga Jinadu, 2020. "Corporate Determinants and Human Resource Accounting Disclosure of Listed Banks in Nigeria," International Journal of Human Resource Studies, Macrothink Institute, vol. 10(4), pages 303317-3033, December.
    18. Nagib Salem Bayoud & Marie Kavanagh & Geoff Slaughter, 2012. "An Empirical Study Of The Relationship Between Corporate Social Responsibility Disclosure And Organizational Performance: Evidence From Libya," International Journal of Management and Marketing Research, The Institute for Business and Finance Research, vol. 5(3), pages 69-82.
    19. Barber, Brad M. & Morse, Adair & Yasuda, Ayako, 2021. "Impact investing," Journal of Financial Economics, Elsevier, vol. 139(1), pages 162-185.
    20. Nazaria Md Aris & Suzila Mohamed Yusof & Lim Jia Wen, 2019. "Analysis of Corporate Governance and Bank Performance: Empirical Evidence From Malaysian Banking Industry," Journal of Public Administration and Governance, Macrothink Institute, vol. 9(3), pages 82-99, December.

    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:gam:jsusta:v:16:y:2024:i:6:p:2459-:d:1357859. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.