When Does ESG Create Value? Corporate Governance as a Moderating Mechanism in Indian Firms (International Journal of Business and Management (IJBM))

Summary

• The study analyzes 711 firm-year observations across 341 firms listed on the National Stock Exchange of India between 2019 and 2023.p.1
• The initial panel comprised 2,045 firm-year observations over the 2019–2023 period prior to complete-case restrictions.p.11
• Refinitiv overall ESG disclosure scores in the sample recorded a mean of 49.82 with a standard deviation of 17.15.p.14
• The composite corporate governance index (CGI) across the sample has a mean of 0.46 and a standard deviation of 0.10.p.14
• In ROA regressions, the overall ESG score interaction with governance (ESG × CGI) is positive and statistically significant with a coefficient of 0.00416.p.16
• In Tobin's Q market-based robustness models, the overall ESG score coefficient is -0.0398 while its interaction with governance is statistically insignificant at 0.0140.p.18

Key insights

1. ESG performance exhibits no statistically significant direct positive association with accounting-based or market-based performance measures in Indian listed firms.p.1
2. Corporate governance quality positively moderates the relationship between overall ESG disclosure scores and accounting profitability measured by ROA.p.16
3. At the pillar level, the social pillar interaction with corporate governance is positive and statistically significant for ROA.p.16
4. The environmental pillar interaction with corporate governance shows no statistically significant relationship with ROA.p.16
5. Governance quality does not significantly moderate the ESG relationship when firm performance is measured using market-based Tobin's Q.p.19
6. Financial leverage serves as the most consistent negative correlate of accounting profitability across all firm fixed-effects ROA specifications.p.15