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Open Access CC BY V4.0
Journal article
ESG Value in US firms: sectoral dynamics with a COVID-19 perspective ESG Value in US firms: sectoral dynamics with a COVID-19 perspective
Applied Economics, Early Access
2026
Abstract
Investors and policymakers are increasingly relying on Environmental, Social, and Governance (ESG) metrics to inform capital allocation and regulatory decisions. However, prior research on the link between ESG and financial performance (FP) has yielded mixed results, ranging from positive to neutral and negative associations. These inconsistencies stem from a lack of sector-specific analysis and insufficient treatment of endogeneity. This study addresses these gaps by adopting a sector-based approach and employing the Generalized Method of Moments (GMM) panel regression to control for endogeneity, ensuring more robust and unbiased estimates. Using 15,886 U.S. firm-year observations from 2017 to 2023, the study evaluates market-based (excess return), accounting-based (ROA and ROE), and financial stability indicators (Altman Z-score and Kaplan-Zingales KZ Index). It also compares results across periods that include and exclude the COVID-19 pandemic. The findings reveal that ESG performance has a significant influence on financial outcomes, but the effects vary across sectors and performance measures. ESG is positively associated with financial flexibility (KZ Index) in most sectors, while its impact on ROA and ROE is more inconsistent. Sectors such as Energy, Utilities, and Consumer Staples benefit the most from ESG engagement, whereas Healthcare and Communication Services may face ESG-related trade-offs.
Details
- Title
- ESG Value in US firms: sectoral dynamics with a COVID-19 perspective ESG Value in US firms: sectoral dynamics with a COVID-19 perspective
- Authors/Creators
- Tanvir Bhuiyan (Author) - Murdoch University, College of BusinessAriful Hoque (Corresponding Author) - Murdoch University, College of BusinessDomenico Gasbarro (Author) - Murdoch University, Murdoch Business School
- Publication Details
- Applied Economics, Early Access
- Publisher
- Informa UK Limited, trading as Taylor & Francis Group.
- Identifiers
- 991005904378407891
- Copyright
- © 2026 The Author(s).
- Murdoch Affiliation
- Murdoch Business School; College of Business
- Language
- English
- Resource Type
- Journal article
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