Purpose This study revisits the relationship between environmental, social and governance (ESG) activities and firm performance. More importantly, it tests whether this relationship is moderated by critical yet underexplored factors such as stakeholder engagement, financial constraints, and religiosity. Design/methodology/approach A wide range of estimation techniques, including pooled ordinary least squares (OLS), fixed effects, system generalized method of moments (GMM) and propensity score matching-difference-in-differences (PSM-DiD), are employed to investigate such issues in a large sample of firms from 31 countries. Findings ESG performance has a positive and significant impact on firm performance. While stakeholder engagement positively moderates this relationship, financial constraints and religiosity negatively moderate it. Interestingly, this positive linkage is driven by environmental and social performance rather than governance performance. Practical implications Firms should proactively engage in ESG initiatives and consider the intervening influences of stakeholder engagement, financial constraints and religiosity in making decisions to invest in ESG activities. Furthermore, our findings can help policymakers understand the financial consequences of ESG practices, which can be helpful in designing new policies to further promote corporate engagement in ESG practices. Originality/value First, our research findings help reconcile the long-standing debate about the value impact of ESG. Second, our paper investigates relatively new aspects of the ESG-firm performance relationship. Third, our study offers more insight into the ESG literature by showing that not all ESG dimensions equally impact firm performance.

Purpose This paper examines how the degree of happiness affects corporate risk-taking and the moderating influence of family ownership of firms on this relationship. Design/methodology/approach The authors use an international sample of 17,654 firm-year observations from 24 countries around the world from 2008 to 2016. Findings Using the happiness index from the World Happiness Report developed by the United Nations Sustainable Development Solutions Network, the authors show that a country's overall happiness is negatively correlated with risk-taking behavior by firms. The findings are robust to an alternative measure of risk-taking by firms. Further analyses document that the negative influence of happiness on firm risk-taking is more pronounced for family-owned firms. Practical implications The paper is consistent with the notion that happier people are likely to be more risk-averse in making financial decisions, which, in turn, reduces corporate risk-taking. Originality/value This study contributes to the broad literature on the determinants of corporate risk-taking and the growing literature on the role of sentiment on investment decisions. The authors contribute to the current debate about family-owned firms by demonstrating that the presence of family trust strengthens the negative influence of happiness on corporate risk-taking, a topic that has been unexplored in previous studies.

"Purpose – This paper examines empirically how growth opportunities determine the relationship between corporate diversification and firm's value in an emerging economy. Design/methodology/approach – This study employs annual data of Indonesian manufacturing firm's spanning five years. To test the potential nonlinear relationship between diversification and value, nonlinear regression model is employed. Baron and Kenny’s (1986) procedure is also employed to test the mediation role of the growth opportunities in the relation between diversification strategy and firm's value. This study also performs further robustness analysis on mediating role of growth opportunities on the relationship between diversification strategy and corporate value using path analysis approach. Findings – The analyses reveal the U-shaped diversification and value relationship; this result suggests that the effect of diversification on value will vary across firms, the negative effect of diversification strategy on firm's value may reverse at higher levels of diversification. Further analysis indicates that such relationship is fully mediated by firm's growth opportunities. Practical implications – Given the results, firms that are considering implementing diversification strategy should seek the optimal level of diversification to gain diversification premium. Furthermore, the manager should observe the best opportunities available for the firm before undertaking the diversification strategies. Originality/value – This paper contributes to the existing literature on diversification strategy by extending the insight of this research area of a large emerging economy, on which prior studies have not reached conclusive results."

Purpose This study investigates whether Chinese local governments’ environmental attention can mitigate corporate “greenwashing”, focusing on the extent of environmental content in annual government work reports as indicative of government environmental attention. This study aims to determine whether enterprises respond to changes in local governmental attention by improving the quality of their environmental information disclosures. Design/methodology/approach Data from China’s A-share listed companies spanning 2013–2021 were sourced from the CSMAR database and company annual reports. Environmental attention data were manually gathered from local government work reports published on official local government websites by using text analysis methods. These datasets were analyzed empirically to assess the impact of local governments’ environmental attention on corporate greenwashing behavior. Findings Results show that increased governmental environmental attention significantly reduces corporate greenwashing behavior by alleviating corporate financing constraints, enhancing independent engagement in environmental initiatives and bolstering stakeholder oversight. Moreover, heterogeneity analysis indicates that the influence of government environmental concerns is pronounced in non-state-owned enterprises, firms with subpar audit quality and those exhibiting myopic management tendencies. Originality/value This study enriches the existing literature on the government–business nexus. It also introduces methodological innovations by employing a lexical analysis of environmental themes in local government work reports instead of using typical event study approaches. Furthermore, it uses a mediating effect model to identify the mechanisms through which government environmental attention influences corporate greenwashing, namely, government subsidies, corporate environmental initiatives and external stakeholder oversight.

Purpose Although publicly listed firms in Sri Lanka have been increasingly adapting sustainability reporting into their annual reporting practices, a limited number of firms prepare sustainability reports by integrating sustainable development goals (SDGs) into reporting mechanisms. This study attempts to develop an index to monitor firms' sustainability reporting practices based on Global Reporting Institute (GRI) guidelines integrating SDGs. Design/methodology/approach This paper develops a sustainability score index using the 17 SDGs utilising the results of content analysis of corporate annual reports of a selected sample of 100 firms listed on the Colombo Stock Exchange (CSE). Principal component analysis was employed to examine the reliability of data in the developed index. Findings Findings show that the developed scoring index is efficient for evaluating the contents of the sustainability reports of Sri Lankan firms. Sustainability reporting practises with regard to the SDGs were observed to have a turbulent period from 2015 to 2019 and the SDGs 12 and 15 were identified to be mostly reported in Sri Lankan corporate sustainability reports. Research limitations/implications The results of the study add to knowledge on the monitoring of sustainability reporting practises with reference to SDGs. The study outcomes are useful for the investors, stakeholders, and statutory bodies to measure the sustainable performance of business firms and assess the firm’s commitment towards the global sustainability agenda. Originality/value To the best of our knowledge, this is the first study that constructs a sustainability reporting score index integrating SDGs.