Corporate social responsibility and business performance: Approach quantile regression

Abstract

This study investigates the interplay between corporate social responsibility (CSR), ESG practices, and business performance within the ASEAN-6 region, focusing on the under-explored role of carbon control. A critical area for further research is the differential impact of ESG on businesses with varying levels of financial performance. It examines the impact of environmental, social, and governance (ESG) initiatives on profitability, using Return on Assets (ROA), Return on Equity (ROE), and a variable denoted by Q. Using data from Refinitiv Eikon's business reports for the period 2016-2022, we employ the GMM regression to address potential endogeneity issues. Quantile regression analysis can be used to explore deeper into the differences in the effects of ESG on companies with varied financial performance levels. The research reveals a positive relationship between a business's ESG score, emissions score, and business performance. Interestingly, this study shows the differential impact of ESG and carbon control across financial performance quantiles. The study proposes practical policy recommendations to empower sustainable development for emerging countries. This research contributes to the existing body of knowledge in several significant ways. First, it adds to the ongoing scholarly debate regarding the relationship between ESG and financial performance, offering empirical evidence from the ASEAN-6 region. Second, it provides compelling evidence of the crucial impact of carbon control on business performance, which is increasingly vital in climate change. Third, it provides empirical evidence of the complexity of this relationship, showing differential impacts across many financial performance quantiles. By incorporating these elements, the study offers a comprehensive and insightful analysis that advances our understanding of the critical interplay between CSR, ESG, carbon control, and business performance in ASEAN-6.