Ngoc Bich Thi Duong

Type of the article: Research Article

Abstract
This study aims to examine the impact of environmental, social, and governance activities on financial performance, with the moderating role of managerial efficiency, using the data from 19,430 observations across Asian economies during 2004–2023. Ordinary least squares regression has been used for panel data analysis with fixed effects for industry, year, and country. The findings reaffirm the positive influence of environmental, social, and governance performance on financial performance (measured by Tobin’s Q and Return on Equity). All three pillars show a positive relationship with financial performance. Moreover, the study shows that managerial efficiency plays a moderating role in increasing the positive impact of these activities on financial performance. Robustness tests include substituting the dependent variable and conducting regression analyses on sub-samples to compare the impact between developed and developing countries within Asian economies, thereby providing guidance for optimal investment decisions. In general, the study stresses the importance of managerial efficiency as a moderating factor. This is especially true in Asia, where ownership structures are often concentrated, and boards of directors have little independence. These findings provide practical implications for policymakers and firm managers in formulating sustainability strategies to optimize financial performance.