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Beyond averages: quantile regression explorations of sustainability practices and firm value

Amina Buallay (Brunel Business School, Brunel University London, London, UK)
Jasim Yusuf AlAjmi (College of Business and Finance, Ahlia University, Manama, Bahrain)
Sayed Fadhul (College of Business and Finance, Ahlia University, Manama, Bahrain)
Aikaterini Papoutsi (Cass Business School, City University of London, London, UK)

International Journal of Innovation Science

ISSN: 1757-2223

Article publication date: 4 June 2024




This study investigates the association between corporate sustainability disclosures and firm performance and value.


This study collected data from 694 manufacturing companies operating in 34 countries between 2007 and 2019, yielding 6,181 firm-year observations. This study employs a dual-model framework to analyze the influence of environmental, social, and governance (ESG) performance on return on assets (ROA), return on equity (ROE), and Tobin's Q ratio. Two sets of control variables, firm- and country-specific, were incorporated to account for potential confounding factors. To validate the robustness of the findings, we utilized a battery of econometric techniques, including traditional ordinary least squares (OLS), firm-fixed effects, quantile regression, and instrumental variables-generalized method of moments (IV-GMM), applied to both the pooled and firm-fixed effects models.


The findings are contradictory: there is a negative relationship between sustainability disclosure and operating performance and return on equity, but a positive relationship between sustainability disclosure and firm value. The negative correlation is consistent with agency theory and the positive correlation is consistent with the legitimacy and shareholder theories. These results are robust to performance measures and estimation methods.

Research limitations/implications

Short-term profit shouldn't deter sustainability. It boosts legitimacy, reputation, efficiency, and long-term market value. Investors must look beyond profitability ratios, embracing ESG metrics. Firms should see sustainability as strategic investment, not cost. Patience pays off: long-term gains await. Regulation can guide balanced growth, prioritizing both shareholders and societal well-being.


This study is the first to adopt a firm’s fixed-effect quantile regression, which provides deep insights into the role of sustainability disclosure in meeting stakeholders’ expectations.



Buallay, A., AlAjmi, J.Y., Fadhul, S. and Papoutsi, A. (2024), "Beyond averages: quantile regression explorations of sustainability practices and firm value", International Journal of Innovation Science, Vol. ahead-of-print No. ahead-of-print.



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