الملخص الإنجليزي
Abstract:
Purpose- ESG has been widely adapted by firms and countries due to the demand of shareholders for more transparency on environmental, social, and governance (ESG) issues. This study aims to investigate the relationship between ESG and the performance of firms in the MENA region. The study also examined the effect of the financial crisis and that of COVID-19 on the relationship between ESG and firm performance. Moreover, the study checked the effect of the models on ESG in the long-term.
Methodology- This study examines 200 firms listed on the stock exchanges of MENA countries over a period of 15 years (2006-2021). The study specifies the years (2007-2008) as financial crisis years and the years (2020-2021) as the COVID- 19 era. The independent variables are ROA, ROE, and Tobin's Q. This study uses firm-specific control variables in the models.
Findings- The focus of the study is to find the relationship between sustainability and performance in non-financial firms. In the main regression, the study found a negative significant effect of ESG on firm performance in the ROA model. However, it found a positive significant effect on firm performance in Tobin's Q model. Size has a negative significant effect on firm performance in Tobin's Q model. Economic growth had a positive significant effect on the ROA model. Leverage had a negative significant effect on firm performance in the ROA model and a positive significant effect on Tobin's Q model. Market-to-book ratio had a negative significant effect on the ROE model.
In the crisis period, ESG had a negative significant effect on firm performance in Tobin's Q model. Leverage had a negative significant effect on firm performance in the ROA model and a positive effect on Tobin's Q model. ESG had a negative significant effect on firm performance in ROA model and positive effect on Tobin's
Q model. Economic growth had a positive effect on firm performance in the ROA model. The crisis had a positive effect on firm performance in the ROA model. The interaction variable which is the ESG in the crisis period found a negative effect on firm performance.
In the COVID-19 period, ESG had a negative significant effect on firm performance in the ROA model and positive significant effect in Tobin's Q model. Size had a negative significant effect on firm performance in Tobin's Q model. Leverage had a negative significant effect on firm performance in the ROA model and a positive significant effect in Tobin's Q model. Economic growth had a positive significant effect on firm performance in the ROA model. The market-to-book ratio had a negative significant effect on firm performance in the ROE model. COVID had a negative significant effect on firm performance in the ROA model. The interaction variable which is the ESG in the COVID period found a positive significant effect on firm performance in Tobin's Q model.
Value- The study fills a gap in the literature by studying the effect of sustainability in non-financial MENA firms. It also contributes to the trendy topic of ESG which is of interest to various stakeholders.
Keywords- ESG, Corporate social responsibility, performance, MENA countries
Dedication
This thesis is dedicated to my father and mother for their inspiration and help in completing this work. May Allah gives them all strength and health.
