IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2409.00758.html
   My bibliography  Save this paper

Does ESG Consistently Promote the Corporate Financial Performance? A Study of the Global Cruise Industry

Author

Listed:
  • Yuechen Wu

Abstract

The analysis of determinants of a company's financial performance has aroused significant attention, particularly, the environmental, social, and governance (ESG) has been the research focus in recent years. In addition to increasing revenue, the cruise industry has actively embraced the initiative of "green shipping". This study investigates the relationship between ESG and corporate financial performance (CFP) in the global cruise sector. This paper utilizes the sample data from the world's largest cruise companies over 2012-2023, to examine the ESG-CFP relationship by a regression model. The results indicate that ESG practices in cruise companies negatively influence CFP, which is further impacted by financial constraints. Furthermore, the heterogeneity analysis suggests that the high time interest earned (TIE) ratios and low total annual greenhouse gas (GHG) emissions worsen the adverse impacts of ESG on CFP. These findings contribute to the theoretical research on ESG and provide practical guidance for cruise industry operators and investors in their decision-making.

Suggested Citation

  • Yuechen Wu, 2024. "Does ESG Consistently Promote the Corporate Financial Performance? A Study of the Global Cruise Industry," Papers 2409.00758, arXiv.org.
    • Handle: RePEc:arx:papers:2409.00758
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2409.00758
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Darren D. Lee & Robert W. Faff, 2009. "Corporate Sustainability Performance and Idiosyncratic Risk: A Global Perspective," The Financial Review, Eastern Finance Association, vol. 44(2), pages 213-237, May.
    2. Luo, Chunhua & Wei, Dianlong & He, Feng, 2023. "Corporate ESG performance and trade credit financing – Evidence from China," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 337-351.
    3. Yoo, Sunbin & Managi, Shunsuke, 2022. "Disclosure or action: Evaluating ESG behavior towards financial performance," Finance Research Letters, Elsevier, vol. 44(C).
    4. Natalia Semenova & Lars G. Hassel, 2008. "Financial outcomes of environmental risk and opportunity for US companies," Sustainable Development, John Wiley & Sons, Ltd., vol. 16(3), pages 195-212.
    5. Qian, Simeng, 2024. "The effect of ESG on enterprise value under the dual carbon goals: From the perspectives of financing constraints and green innovation," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 318-331.
    6. Henda Abdi & Mohamed Ali Brahim Omri, 2020. "Web-based disclosure and the cost of debt: MENA countries evidence," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 18(3), pages 533-561, May.
    7. Jing‐Lin Duanmu & Maoliang Bu & Russell Pittman, 2018. "Does market competition dampen environmental performance? Evidence from China," Strategic Management Journal, Wiley Blackwell, vol. 39(11), pages 3006-3030, November.
    8. Dylan Rassier & Dietrich Earnhart, 2010. "Does the Porter Hypothesis Explain Expected Future Financial Performance? The Effect of Clean Water Regulation on Chemical Manufacturing Firms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(3), pages 353-377, March.
    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. Eduardo Duque-Grisales & Javier Aguilera-Caracuel, 2021. "Environmental, Social and Governance (ESG) Scores and Financial Performance of Multilatinas: Moderating Effects of Geographic International Diversification and Financial Slack," Journal of Business Ethics, Springer, vol. 168(2), pages 315-334, January.
    2. Bagh, Tanveer & Zhou, Bingjun & Alawi, Suha Mahmoud & Azam, Rauf I, 2024. "ESG resilience: Exploring the non-linear effects of ESG performance on firms sustainable growth," Research in International Business and Finance, Elsevier, vol. 70(PA).
    3. Lei Ruan & Heng Liu, 2021. "Environmental, Social, Governance Activities and Firm Performance: Evidence from China," Sustainability, MDPI, vol. 13(2), pages 1-16, January.
    4. Chai, Shanglei & Cao, Mengjun & Li, Qiang & Ji, Qiang & Liu, Zuankuo, 2023. "Exploring the nexus between ESG disclosure and corporate sustainable growth: Moderating role of media attention," Finance Research Letters, Elsevier, vol. 58(PC).
    5. Lee, Ki-Hoon & Min, Byung & Yook, Keun-Hyo, 2015. "The impacts of carbon (CO2) emissions and environmental research and development (R&D) investment on firm performance," International Journal of Production Economics, Elsevier, vol. 167(C), pages 1-11.
    6. Fereshteh Mahmoudian & Johnny Jermias, 2022. "The influence of governance structure on the relationship between pay ratio and environmental and social performance," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 2992-3013, November.
    7. Jean-Michel Sahuta & Sandrine Boulerne & Medhi Mili & Frédéric Teulon, 2014. "What Relation Exists Between Corporate Social Responsibility (Csr) And Longevity Of Firms?," Working Papers 2014-248, Department of Research, Ipag Business School.
    8. Ferrell, Allen & Liang, Hao & Renneboog, Luc, 2016. "Socially responsible firms," Journal of Financial Economics, Elsevier, vol. 122(3), pages 585-606.
    9. Meles, Antonio & Salerno, Dario & Sampagnaro, Gabriele & Verdoliva, Vincenzo & Zhang, Jianing, 2023. "The influence of green innovation on default risk: Evidence from Europe," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 692-710.
    10. Yuanyuan Zhang & Zhe Ouyang, 2021. "Doing well by doing good: How corporate environmental responsibility influences corporate financial performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(1), pages 54-63, January.
    11. Xu, Xiaoying & Jin, Mei & Gong, Xinshu, 2024. "Local environmental goal constraint intensity and corporate ESG performance: An empirical observation based on China," Finance Research Letters, Elsevier, vol. 62(PB).
    12. Wong, Woei Chyuan & Batten, Jonathan A. & Ahmad, Abd Halim & Mohamed-Arshad, Shamsul Bahrain & Nordin, Sabariah & Adzis, Azira Abdul, 2021. "Does ESG certification add firm value?," Finance Research Letters, Elsevier, vol. 39(C).
    13. Mahata, Ajit & Rai, Anish & Nurujjaman, Md. & Prakash, Om, 2021. "Modeling and analysis of the effect of COVID-19 on the stock price: V and L-shape recovery," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 574(C).
    14. Thomas Kaspereit & Kerstin Lopatta, 2013. "The Value Relevance of SAM's Corporate Sustainability Ranking and GRI Sustainability Reporting in the European Stock Markets," ZenTra Working Papers in Transnational Studies 19 / 2013, ZenTra - Center for Transnational Studies, revised Oct 2013.
    15. 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).
    16. Denny IRAWAN & OKIMOTO Tatsuyoshi, 2021. "How Do ESG Performance and Awareness Affect Firm Value and Corporate Overinvestment?," Discussion papers 21033, Research Institute of Economy, Trade and Industry (RIETI).
    17. Rafał Nagaj & Bożena Gajdzik & Radosław Wolniak & Wieslaw Wes Grebski, 2024. "The Impact of Deep Decarbonization Policy on the Level of Greenhouse Gas Emissions in the European Union," Energies, MDPI, vol. 17(5), pages 1-23, March.
    18. Natalia Semenova, 2021. "Management control systems in response to social and environmental risk in large Nordic companies," International Journal of Corporate Social Responsibility, Springer, vol. 6(1), pages 1-11, December.
    19. Malik, Ihtisham A. & Chowdhury, Hasibul & Alam, Md Samsul, 2023. "Equity market response to natural disasters: Does firm's corporate social responsibility make difference?," Global Finance Journal, Elsevier, vol. 55(C).
    20. Xiaoting Hu & Ximing Yin & Zhanming Jin & Jizhen Li, 2020. "How Do International M&As Affect Rival Firm’s Sustainable Performance? —Empirical Evidence from an Emerging Market," Sustainability, MDPI, vol. 12(4), pages 1-17, February.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:arx:papers:2409.00758. 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: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    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.