Abstract

The research paper reports the impact of New Zealand companies’ environmental, social, and governance  disclosures on their financial performance and market value. Further, the research examined how financial slack (FS) moderates the relationship between environmental, social, and governance scores (ESGS) and company financial performance. The sample consisted of quarterly data from New Zealand-listed companies from 2010 to 2021. Univariate and multivariate methods were used to test the hypotheses and assess the objectives. The results indicate that the relationship between environmental, social, and disclosures (ESGD) and the market value of companies is positive and significant. However, there exists a negative relationship between ESGD and financial performance. After adding Financial slack(FS) as a moderating variable, the ESGS and financial performance relationship became significant. This suggests when companies have surplus funds, they invest in environmental, social, and governance-related activities which enhances both their financial performance and reputation. The research is helpful to academics, companies, and policymakers interested in understanding the impact of sustainable practices on companies. Furthermore, the findings provide insight into initiatives that regulatory authorities might take to improve environmental, social, and governance disclosures and reporting among New Zealand companies for long-term value creation.

Keywords:
Environmental, social and governance (ESG), performance, market value, sustainability.

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