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ESG and corporate financial performance: the mediating role of green innovation: UK common law versus Germany civil law

Salim Chouaibi (University of Sfax, Sfax, Tunisia)
Jamel Chouaibi (University of Sfax, Sfax, Tunisia)
Matteo Rossi (DEMM, University of Sannio, Benevento, Italy)

EuroMed Journal of Business

ISSN: 1450-2194

Article publication date: 13 January 2021

Issue publication date: 17 February 2022

15192

Abstract

Purpose

The purpose of this paper is to investigate the direct and indirect links between environmental, social and governance (ESG) practices and financial performance using the mediate role of green innovation.

Design/methodology/approach

To test the current study hypotheses, the authors applied linear regressions with a panel data using the Thomson Reuters ASSET4 and Bloomberg database from a sample of 115 UK and 90 Germany companies selected from the ESG index over the period 2005–2019.

Findings

The results show that the strengths ESG increase the firm value and the weaknesses decrease it. In addition, the authors find that green innovation fully mediates the relationship between ESG practices and financial performance in UK and Germany.

Practical implications

The findings provide interesting implications to academics practitioners and regulators who are interested in discovering ESG score, financial performance and green innovation. The results also provide insights to regulators and the board of directors on future growth opportunities for the company and the country.

Originality/value

This study is unique in examining the mediation effect of green innovation on the relationship between ESG practices and financial performance.

Keywords

Acknowledgements

The authors would like to thank the editor and the two anonymous referees of the “EuroMed Journal of Business” for their insightful comments that have greatly benefited the paper. The author(s) received no financial support for the research, authorship and/or publication of this article.

Citation

Chouaibi, S., Chouaibi, J. and Rossi, M. (2022), "ESG and corporate financial performance: the mediating role of green innovation: UK common law versus Germany civil law", EuroMed Journal of Business, Vol. 17 No. 1, pp. 46-71. https://doi.org/10.1108/EMJB-09-2020-0101

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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