Hamid, Lubna; Shea , Falik
A icle
En i onmen al, social, and go e nance sco e and
co po a e inancial pe o mance: The s a egic ole o
co po a e cash holdings
Pakis an Jou nal o Comme ce and Social Sciences (PJCSS)
P o ided in Coope a ion wi h:
Joha Educa ion Socie y, Pakis an (JESPK)
Sugges ed Ci a ion: Hamid, Lubna; Shea , Falik (2025) : En i onmen al, social, and go e nance sco e
and co po a e inancial pe o mance: The s a egic ole o co po a e cash holdings, Pakis an Jou nal
o Comme ce and Social Sciences (PJCSS), ISSN 2309-8619, Joha Educa ion Socie y, Pakis an (JESPK),
Laho e, Vol. 19, Iss. 3, pp. 578-597,
h ps://doi.o g/10.64534/Comme .2025.574
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/330362
S anda d-Nu zungsbedingungen:
Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen
Zwecken und zum P i a geb auch gespeiche und kopie we den.
Sie dü en die Dokumen e nich ü ö en liche ode komme zielle
Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich
machen, e eiben ode ande wei ig nu zen.
So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen
(insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en,
gel en abweichend on diesen Nu zungsbedingungen die in de do
genann en Lizenz gewäh en Nu zungs ech e.
Te ms o use:
Documen s in EconS o may be sa ed and copied o you pe sonal
and schola ly pu poses.
You a e no o copy documen s o public o comme cial pu poses, o
exhibi he documen s publicly, o make hem publicly a ailable on he
in e ne , o o dis ibu e o o he wise use he documen s in public.
I he documen s ha e been made a ailable unde an Open Con en
Licence (especially C ea i e Commons Licences), you may exe cise
u he usage igh s as speci ied in he indica ed licence.
h ps://c ea i ecommons.o g/licenses/by-nc/4.0/
Pakis an Jou nal o Comme ce and Social Sciences
2025, Vol. 19(3), 578-597
h ps://doi.o g/10.64534/Comme .2025.574
En i onmen al, Social, and Go e nance Sco e and
Co po a e Financial Pe o mance: The S a egic
Role o Co po a e Cash Holdings
Lubna Hamid 1* & Falik Shea 2
1 Vi ual Uni e si y o Pakis an, Vi ual Uni e si y Campus, Abdullahpu , Faisalabad, Pakis an
2 Na ional Tex ile Uni e si y, Sheikhupu a Road, Faisalabad, Pakis an
*Co esponding au ho ’s Email: lubna.hamid@ u.edu.pk
A icle His o y
Recei ed: 20 Ma 2025
Re ised: 21 Sep 2025
Accep ed: 27 Sep 2025
Published: 30 Sep 2025
Abs ac
This esea ch pape in es iga es he impac o En i onmen al, Social, and Go e nance
(ESG) pe o mance on co po a e inancial pe o mance (CFP). Mo eo e , i explo es he
mode a ing ole o co po a e cash holdings in he link be ween ESG and he inancial
pe o mance o i ms. Da a is collec ed o companies wi h ESG a ings h oughou he
wo ld. The inal sample o his s udy consis s o 6072 i ms om 1999 o 2020 co e ing
he a ious egions o he uni e se, including Eas Asia and Paci ic, Eu ope and Cen al
Asia, Sou h Asia and Sub-Saha an A ica, La in Ame ica and he Ca ibbean, Middle Eas
and No h A ica, and No h Ame ica. Panel da a eg ession by using STATA so wa e is
conduc ed o in es iga e he di ec and mode a ing oles among he a iables. The
esea ch’s indings show ha highe ESG hu s i ms' p o i abili y, measu ed by EBIT;
howe e , ESG posi i ely in luences i ms’ e enue (sales). Fu he mo e, we examined he
mode a ing ole o co po a e cash holdings on he ESG and CFP nexus. The esul s indica e
ha i ms wi h subs an ial cash ese es can be e manage he cos s associa ed wi h ESG
ac i i ies, mi iga e he impac on p o i abili y, and enhance e enue gene a ion. Ou
esea ch s udy con ibu es o he exis ing knowledge and p o ides no el insigh s ega ding
ESG by in es iga ing he ole o co po a e cash holdings on he ESG and co po a e
inancial pe o mance nexus. This s udy highligh s he incen i es o co po a e manage s
o main ain su icien cash ese es. Secondly, i ms should adop go e nance policies ha
balance sho - un inancial goals wi h long- un sus ainabili y objec i es.
Keywo ds: Co po a e cash holdings, ESG sco e, global lis ed i ms, inancial
pe o mance.
1. In oduc ion
En i onmen al sus ainabili y is a c ucial conce n o policymake s and business
communi ies wo ldwide. Clima e change and he deple ion o esou ces a e compelling
easons o inc ease he emphasis on en i onmen al, social, and go e nance (ESG) p ac ices
Hamid & Shea
579
and sus ainabili y epo ing o i ms. O ganiza ions ha e adop ed a ious en i onmen al
managemen s a egies (Dai e al., 2017; Yang e al., 2019). G een p oduc ion (Gong e al.,
2018), Eco-designs, sus ainable supply chain managemen (Go indan e al., 2014), wa e
conse a ion, g een ma ke ing (G oening e al., 2018), and clima e isk managemen a e
some among he o he ini ia i es and p ac ices op ed o as en i onmen al s a egies.
Globally, o measu e he pe o mance o co po a es ela ed o en i onmen al, social, and
go e nance ac o s, a ing agencies such as Re ini , Sus ainaly ics, Bloombe g, MSCI,
RepRisk, and Vigo Ei is, among o he s, eme ged o issue ESG sco es o co po a es. These
a ing agencies collec i m-le el in o ma ion on di e en sus ainabili y pe spec i es, such
as emissions, e luen s, was e managemen , wa e use, land con e sion, biodi e si y
managemen , business e hics, human capi al managemen , and go e nance p ac ices. Sub-
indexes a e cons uc ed o dis inc le els o agg ega ion, weigh s a e applied and a sco e
(e.g., A, A-, B, o 1 o 100) is assigned o each company. These sco es p esen hei
assessmen o he company’s sus ainable p ac ices.
Li e a u e highligh s ha ESG disclosu es con ibu e signi ican ly owa ds i ms’ inancial
pe o mance. Ragha an, (2022) a gues ha be e ESG pe o mance esul s in a be e
inancial posi ion. S e an & Paul, (2008) e eals ha en i onmen al pe o mance leads o
imp o ed inancial ou comes by inc easing e enue due o be e access o ma ke s &
inances, p oduc di e en ia ion, good ela ions wi h s akeholde s, and p ope isk
managemen . ESG p ac ices posi i ely in luence a i m’s inancial posi ion by educing
inancial es ic ions (Li e al., 2018; Zhang & Lucey, 2022) mo eo e , a i m’s non-
inancial disclosu e assis s in es ima ing u u e inancial pe o mance (Se a eim & G ewal,
2017). Albi a e al., (2020) analyzed he ela ionship o ESG disclosu e and i ms’
pe o mance h ough p e-assessmen and pos -assessmen me hods and obse ed a posi i e
and signi ican e ec o ESG Sco es on i ms’ inancial pe o mance. Fi ms wi h be e
ESG p ac ices a e o en in a posi ion o manage egula o y isks, a ac socially esponsible
in es o s, and sus ain long- e m g ow h.
ESG disclosu es and highe ESG sco es e lec he e iciency, c edibili y, and anspa ency
o he o ganiza ion, hese a e he d i ing ac o s o gain in es o s’ us ha ul ima ely aise
i m alue. Socially conscious in es o s pa k hei unds in i ms wi h high ESG sco es o
de elop g een po olios and belie e he ESG s anding o a i m is a selec ion c i e ion in
addi ion o inancial measu es o cons uc decisions ega ding sus ainable in es men s
(A an e al., 2018). Con e sely, some s udies exhibi a nega i e ela ion be ween ESG
a ings and i m inancial ou comes (Fa ooq, 2015; Zahid e al., 2022; Saygili e al., 2022).
These dis inc indings a e compelling us o eexamine he ESG and CFP nexus.
Fu he mo e, one o he c ucial aspec s in inancial managemen is co po a e cash holdings,
ha is he mos liquid asse s o o ganiza ions. Cash ese es e lec i ms’ liquidi y, isk
managemen , and s a egic in es men capabili ies. Cash and ma ke able secu i ies
p esen ed on he ace o he balance shee a e impo an asse s and a ac he a en ion o
ESG, Co po a e Financial Pe o mance and Cash Holdings
580
in es o s, analys s, and o he companies (Sub amaniam e al., 2011). Subs an ial cash
holdings se e as a bu e agains inancial dis ess o i ms and also enable hem o
capi alize on easible and p o i able in es men oppo uni ies by gi ing he i ms lexibili y
o in es . Chen e al., (2020) a gue ha “cash is king” as i decides he i ms’ inancing,
in es men , and ope a ions, and consequen ly de e mines i ms’ o e all alue.
The objec i e o his esea ch is o explo e he mode a ing ole o co po a e cash holdings
in he ela ionship be ween i ms’ ESG a ings and inancial pe o mance. How migh cash
holdings in luence he ela ionship be ween ESG sco es and he inancial pe o mance o
a i m? The co e hypo hesis is ha co po a ions wi h highe cash holdings migh le e age
hei liquidi y o in es mo e e ec i ely and e icien ly in ESG p ac ices, hus enhancing
hei inancial pe o mance. This hypo hesis is aligned wi h he s udy o Chang & Yang
(2022), hey a gue ha i ms wi h highe cash ese es in es mo e in esea ch and
de elopmen (R&D) and spend mo e on capi al expendi u es. On he con a y, i ms wi h
low cash holdings may ace mo e challenges in coping wi h ESG in es men s, cos s, and
o he inancial obliga ions, he eby po en ially a ec ing o e all p o i abili y and o he
economic ou comes.
This s udy aims o ill he gap in exis ing li e a u e by in es iga ing he in e play among
he ESG, inancial pe o mance, and cash holdings. As pe he knowledge o he au ho s,
he e is no esea ch in he li e a u e ha has s udied i ms’ ESG sco es, inancial
pe o mance, and cash holdings, p o iding e idence om all o e he wo ld. This s udy
highligh s he dis inc aspec o how inancial liquidi y, speci ically, cash holdings, can
in luence/shape he ESG s a egies on inancial ou comes by in es iga ing he mode a ing
ole o cash ese es. This esea ch add esses wo c i ical ques ions: Can inancial liquidi y
mi iga e he po en ial nega i e impac o ESG p ac ices on co po a e inancial ou comes?
Do co po a e cash holdings enhance he posi i e e ec s o s ong ESG sco es on co po a e
inancial pe o mance?
Ou s udy is ele an in he cu en global scena io, whe e co po a es simul aneously ace
economic unce ain ies and sus ainabili y challenges. The in e play be ween co po a e cash
holdings, ESG sco e, and inancial ou comes can in luence co po a e policies, in es o s’
s a egies and p omo e a holis ic app oach ha in eg a es inancial s abili y and sus ainable
p ac ices. This esea ch con ibu es o he li e a u e by illing he gap among inancial
managemen , ESG conside a ions, and co po a e pe o mance. I highligh s he s a egic
ole o liquidi y in suppo ing i ms in pu suing sus ainabili y objec i es. Adding co po a e
cash holdings helps us look beyond ESG and CFP's di ec ela ionship and is use ul o
co po a e leade s o build a conduci e en i onmen .
The s uc u e o his pape is as ollows: Sec ion 2 desc ibes he heo e ical backg ound
and li e a u e, Sec ion 3 desc ibes da a and me hodology, Sec ion 4 p esen s esul s, and
Sec ion 5 concludes he indings and highligh s policy and manage ial implica ions.
Hamid & Shea
581
2. Theo e ical Backg ound and Li e a u e
S akeholde heo y is linked o ESG esea ch. Business is iewed as a sys em o c ea ing
alue o s akeholde s (F eeman, 1984). I is ine i able o o ganiza ions o e alua e
con inuously how hey in e ac wi h he s akeholde s. I is he co e idea o s akeholde
heo y ha o ganiza ions mus ealize he alue o ela ionships wi h s akeholde s o
succeed o ail (Al Amosh e al., 2024). Despi e he adi ional app oach o he business,
he inc ease o sha eholde s' weal h (p o i maximiza ion), i is now belie ed ha a
company's su i al is ied o he inpu and pa icipa ion o socie y a la ge. A i m’s
exis ence is no only o pu sue he in e es s o i s own, bu he in e es s o s akeholde s as
a whole (Donaldson & P es on, 1995). The p ima y s akeholde s o a company a e
sha eholde s, employees, consume s, supplie s, and c edi o s. Simila ly, he seconda y
s akeholde s a e egula o y bodies, esiden s, communi ies, and all hose a ec ed by
business ac i i ies in di ec o indi ec manne s, like he na u al en i onmen . Thus, i ms
a e o conside he in e es s o all s akeholde s and ensu e sus ainabili y by ocusing on
social and en i onmen al conce ns.
In li e a u e, esea che s ha e employed ESG ac o s, disclosu es, o sco es o assess he
ESG pe o mance o o ganiza ions. The s udy o Fa emi e al., (2018) shows ha
o ganiza ions wi h be e en i onmen al pe o mance con ibu e o inancial ou comes.
O li zky, (2013) p o ides e idence ha i ms wi h be e CSR p ac ices enhance he i m's
inancial pe o mance. ESG p ac ices and co po a e esponsible beha io upg ade he
pe o mance and alues o i ms (Bhaska an e al., 2020; Cek & Eyupoglu, 2020; Ahmad
e al., 2021). S udy o Ala eeni & Hamdan, (2020) in es iga e he o e all and each
dimension’s e ec s on he inancial ou comes o lis ed UK companies, o e all, ESG sco es
show a signi ican as well as posi i e impac , howe e , indi idually, each dimension:
en i onmen , social, and go e nance, is showing mixed esul s on he dependen a iable,
ha is, he co po a e inancial pe o mance.
ESG disclosu e and he i m’s ma ke pe o mance a e assessed by Buallay e al., (2020),
indica ing a posi i e associa ion. Lo & Sheu, (2007) p o ed he signi ican and posi i e
associa ion be ween co po a es’ sus ainabili y and i ms’ ma ke alue measu ed as
Tobin’s Q. En i onmen al disclosu es, ei he manda o y o olun a y, also exhibi a
posi i e impac on co po a es’ inancial ou comes (Wu e al., 2024).
2.1 The T ade-o Model o Cash Holdings and Hypo hesis
In a s a e o pe ec capi al ma ke , he e will be no cos o ansac ion o aising unds and
he le el o cash holdings will be i ele an o he i m’s alue. Howe e , capi al ma ke s
a e impe ec , so he ansac ion cos s a e ele an while aising unds. The e o e,
companies de e mine he sui able le el o cash holdings by managing he ade-o
be ween he cos and bene i s o in es ing unds in liquid asse s as p oposed by Mille &
O , (1966) and Kim e al. (1998). The alue o he company eaches i s peak when he
ESG, Co po a e Financial Pe o mance and Cash Holdings
582
ad an ages o holding cash a e equi alen o he cos o main aining cash ese es. Keeping
cash in hand educes he likelihood o encoun e ing inancial di icul ies, minimizes
ansac ion expenses, and c ea es addi ional a enues o in es men ha migh o he wise
be inaccessible due o inancial cons ain s (Guizani, 2017; Lozano & Yaman, 2020).
Inadequa e cash ese es may lead o liquidi y sho age, educe he desi ed in es men s
(Campello e al., 2010; Me ca an i e al., 2019), limi spending o esea ch and
de elopmen (Chang & Tang, 2021), inc ease inancing expenses, and a shock di idend
policy (Lee & Suh, 2011).
Yuan e al., (2025) ha e gi en he e idence ha ESG pe o mance o a company also
posi i ely a ec s i s cash ese es. Ahmed & Khala (2025) examined he mode a ing ole
o cash holdings in he ela ionship be ween ESG pe o mance and companies’ ma ke
alue, sample o he s udy was Eu opean Union (EU) companies. Thei esul s show ha
cash ese es ha e a posi i e e ec on i ms’ ma ke alue.
Despi e he ex ensi e li e a u e on ESG, co po a e cash holdings, and co po a e inancial
pe o mance, none o he esea ch has inco po a ed he mode a ing ole o co po a e cash
holdings be ween he ela ionship o ESG dimensions and CFP. The con ibu ion o ou
esea ch is wo old: one is o eexamine he connec ion be ween ESG and CFP, and he
second is o examine he s a egic ole o cash holdings in his di ec ion.
➢ Hypo hesis 1: ESG componen s (En i onmen , Social, and Go e nance) ha e a
nega i e impac on co po a e inancial ou comes.
➢ Hypo hesis 2: Co po a e cash holdings posi i ely mode a e he ela ionship o
ESG pe o mance and inancial pe o mance.
3. Da a and Me hodology
This sec ion p esen s summa y o he sample, a iables, desc ip i e s a is ics, and
me hodology.
3.1 Sample Selec ion
Da a was collec ed om Da aS eam, a global inancial and mac oeconomic ime se ies
da abase, o 32,574 publicly lis ed companies in 92 coun ies om 1999 o 2020. We
il e ed he da a o companies ha ing ESG sco es in he Da aS eam da abase, and a e
sc u iny, ended up wi h 6072 companies and 39067 i m-yea obse a ions because o da a
una ailabili y o some companies, as ESG disclosu es a e no manda o y in some egions.
The summa y o sample is p esen ed in Table 1.
Hamid & Shea
583
Table 1: Sample Summa y
Ini ial Sample
Wi h ESG
Componen Sco es
Sample Pe iod
1999 – 2020
1999 – 2020
Numbe o Companies
Numbe o Coun ies
92
55
To al Obse a ions
308,257
39,067
Region-wise Numbe o Obse a ions
Eas Asia and Paci ic
98,583
9,469
Eu ope and Cen al Asia
49,213
5,323
La in Ame ica and he Ca ibbean
6,628
1,035
Middle Eas and No h A ica
7,721
230
No h Ame ica
129,815
22,397
Sou h Asia
13,489
337
Sub-Saha an A ica
2,808
276
3.2 Dependen Va iables
Two pa ame e s a e used o measu e co po a e inancial pe o mance: p o i abili y and
sales e enue. We measu e p o i abili y as ea nings be o e in e es and axes (EBIT) and
sales e enue as he na u al loga i hm o ne sales o a yea . Resea ch s udies use he sales
e enue o measu e i m p o i abili y (Zahid e al., 2022) and EBIT (Xu & Li, 2022);
(Ca nini Pulino e al., 2022); (Nguyen & Nguyen, 2020)) as a p oxy o i m inancial
pe o mance.
3.3 Independen and Mode a ing Va iables
ESG componen s (en i onmen , social, and go e nance) sco es a e used as independen
a iables. The ou pu o hese h ee componen s con ac s he ESG sco es. I is aluable o
assess he impac o each independen componen (E, S, and G) o p e en he po en ial
in luence o one dimension on ano he . (Buallay e al., 2020). Assessing while keeping his
ca ego iza ion suppo s us o in es iga e which ESG componen sco e is mos signi ican ,
and which posi i ely o nega i ely impac s co po a e inancial pe o mance.
The mode a ing a iable in his esea ch s udy is co po a e cash holdings. Co po a e cash
holdings a e measu ed as cash and ma ke able secu i ies no malized by o al asse s (Ja adi
e al., 2021).
ESG, Co po a e Financial Pe o mance and Cash Holdings
584
3.4 Con ol Va iables
Li e a u e indica es se e al ac o s in luence co po a e inancial pe o mance. We a e also
conside ing con ol a iables ha align wi h he li e a u e o a oid biased analyses and o
assess he ac ual impac o independen and mode a ing a iables. Con ol a iables
included in his esea ch a e size, le e age, and g ow h. La ge o ganiza ions can bene i
om economies o scale, which is c ucial o achie ing inancial ou comes. Deb le el
a ec s he inance cos s ha can dis u b he p o i abili y o o ganiza ions. Mo eo e ,
ollowing he p io s udies o Smi h & Wa s (1992) ma ke - o-book a io is included as
con ol a iable o p oxy o g ow h oppo uni ies. Size is measu ed as he na u al log o
o al asse s (Zhu e al., 2014); (Wang & Wang, 2024). Deb /le e age a ec s he cash low
o a co po a ion. Le e age is measu ed as he a io o o al deb o o al asse s (Zahid e al.,
2022). G ow h is measu ed as he ma ke - o-book a io, he a io o he equi y’s ma ke
alue o equi y’s book alue.
Table 2: Lis o Va iables
Va iable Role
Symbol
Measu e
Dependen
a iables
Sales Re enue
Re (logn)
Na u al loga i hm o ne
sales
Ea nings be o e
In e es and Taxes
EBIT
EBIT di ided by o al
asse s
Independen and
mode a ing
a iables
En i onmen al
pe o mance
sco e
En i onmen
E sco e ex ac ed om
he Da as eam
Social
pe o mance
sco e
Social
S sco e ex ac ed om
he Da as eam
Go e nance
pe o mance
sco e
Go e nance
G sco e ex ac ed om
he Da as eam
Cash holdings
CASH
Cash and ma ke able
secu i ies o o al asse s
Con ol
Va iables
Size
SIZE
Na u al loga i hm o o al
asse s
Le e age
LEV
To al deb o o al asse s
G ow h
MTB (Ma ke -
o-Book)
Equi y’s ma ke alue o
equi y’s book alue
Hamid & Shea
585
3.5 Empi ical Models
𝐹𝑖𝑛𝑎𝑛𝑖𝑐𝑎𝑙 𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒𝑖,𝑡 = 𝛼°+ 𝛽1𝐸𝑛𝑣𝑖𝑟𝑜𝑛𝑚𝑒𝑛𝑡𝑎𝑙 𝑆𝑐𝑜𝑟𝑒𝑖,𝑡 + 𝛽2𝑆𝐼𝑍𝐸𝑖,𝑡 +
𝛽3𝐿𝐸𝑉𝑖,𝑡 + 𝛽4 𝑀𝑇𝐵𝑖,𝑡 + 𝑌𝑒𝑎𝑟 𝐷𝑢𝑚𝑚𝑖𝑒𝑠 + 𝜀𝑖,𝑡 (1)
𝐹𝑖𝑛𝑎𝑛𝑖𝑐𝑎𝑙 𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒𝑖,𝑡 = 𝛼°+ 𝛽1𝑆𝑜𝑐𝑖𝑎𝑙 𝑆𝑐𝑜𝑟𝑒𝑖,𝑡 + 𝛽2𝑆𝐼𝑍𝐸𝑖,𝑡 + 𝛽3𝐿𝐸𝑉𝑖,𝑡 +
𝛽4 𝑀𝑇𝐵𝑖,𝑡 + 𝑌𝑒𝑎𝑟 𝐷𝑢𝑚𝑚𝑖𝑒𝑠 + 𝜀𝑖,𝑡 (2)
𝐹𝑖𝑛𝑎𝑛𝑖𝑐𝑎𝑙 𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒𝑖,𝑡 = 𝛼°+ 𝛽1𝐺𝑜𝑣𝑒𝑟𝑛𝑎𝑛𝑐𝑒 𝑆𝑐𝑜𝑟𝑒𝑖,𝑡 + 𝛽2𝑆𝐼𝑍𝐸𝑖,𝑡 +
𝛽3𝐿𝐸𝑉𝑖,𝑡 + 𝛽4 𝑀𝑇𝐵𝑖,𝑡 + 𝑌𝑒𝑎𝑟 𝐷𝑢𝑚𝑚𝑖𝑒𝑠 + 𝜀𝑖,𝑡 (3)
The abo e mul i a ia e eg ession models 1, 2, and 3 a e es ima ed o see he hypo hesized
ela ionship be ween componen s o ESG and co po a e inancial pe o mance. In he
abo e models, i is he i m and is he ime (in yea s). Fi ms’ inancial pe o mance is
measu ed by ea nings be o e in e es and axes (EBIT) and sales e enue (Re (logn)). Yea
dummies a e included o con ol o ime-speci ic e ec s. The e o e m is deno ed by ε.
To in es iga e he mode a ing impac o co po a e cash holdings in he ESG and inancial
pe o mance nexus, an in e ac ion e m is gene a ed: Cash holdings × ESG componen s.
The in e ac ion e m is included in he ollowing models.
𝐹𝑖𝑛𝑎𝑛𝑖𝑐𝑎𝑙 𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒𝑖,𝑡 = 𝛼°+ 𝛽1𝐸𝑛𝑣𝑖𝑟𝑜𝑛𝑚𝑒𝑛𝑡𝑎𝑙 𝑆𝑐𝑜𝑟𝑒𝑖,𝑡 +
𝛽2𝐶𝑎𝑠ℎ ℎ𝑜𝑙𝑑𝑖𝑛𝑔𝑠𝑖,𝑡 + 𝛽3𝐶𝑎𝑠ℎ ℎ𝑜𝑙𝑑𝑖𝑛𝑔𝑠𝑖,𝑡 ∗ 𝐸𝑛𝑣𝑖𝑟𝑜𝑛𝑚𝑒𝑛𝑡𝑎𝑙 𝑆𝑐𝑜𝑟𝑒𝑖,𝑡 + 𝛽4𝑆𝐼𝑍𝐸𝑖,𝑡 +
𝛽5𝐿𝐸𝑉𝑖,𝑡 + 𝛽6 𝑀𝑇𝐵𝑖,𝑡 + 𝑌𝑒𝑎𝑟 𝐷𝑢𝑚𝑚𝑖𝑒𝑠 + 𝜀𝑖,𝑡 (4)
𝐹𝑖𝑛𝑎𝑛𝑖𝑐𝑎𝑙 𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒𝑖,𝑡 = 𝛼°+ 𝛽1𝑆𝑜𝑐𝑖𝑎𝑙 𝑆𝑐𝑜𝑟𝑒𝑖,𝑡 + 𝛽2𝐶𝑎𝑠ℎ ℎ𝑜𝑙𝑑𝑖𝑛𝑔𝑠𝑖,𝑡 +
𝛽3𝐶𝑎𝑠ℎ ℎ𝑜𝑙𝑑𝑖𝑛𝑔𝑠𝑖,𝑡 ∗ 𝑆𝑜𝑐𝑖𝑎𝑙 𝑆𝑐𝑜𝑟𝑒𝑖,𝑡 + 𝛽4𝑆𝐼𝑍𝐸𝑖,𝑡 + 𝛽5𝐿𝐸𝑉𝑖,𝑡 + 𝛽6 𝑀𝑇𝐵𝑖,𝑡 +
𝑌𝑒𝑎𝑟 𝐷𝑢𝑚𝑚𝑖𝑒𝑠 + 𝜀𝑖,𝑡 (5)
𝐹𝑖𝑛𝑎𝑛𝑖𝑐𝑎𝑙 𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒𝑖,𝑡 = 𝛼°+ 𝛽1𝐺𝑜𝑣𝑒𝑟𝑛𝑎𝑛𝑐𝑒 𝑆𝑐𝑜𝑟𝑒𝑖,𝑡 + 𝛽2𝐶𝑎𝑠ℎ ℎ𝑜𝑙𝑑𝑖𝑛𝑔𝑠𝑖,𝑡 +
𝛽3𝐶𝑎𝑠ℎ ℎ𝑜𝑙𝑑𝑖𝑛𝑔𝑠𝑖,𝑡 ∗ 𝐺𝑜𝑣𝑒𝑟𝑛𝑎𝑛𝑐𝑒 𝑆𝑐𝑜𝑟𝑒𝑖,𝑡 + 𝛽4𝑆𝐼𝑍𝐸𝑖,𝑡 + 𝛽5𝐿𝐸𝑉𝑖,𝑡 + 𝛽6 𝑀𝑇𝐵𝑖,𝑡 +
𝑌𝑒𝑎𝑟 𝐷𝑢𝑚𝑚𝑖𝑒𝑠 + 𝜀𝑖,𝑡 (6)
4. Resul s and Discussion
4.1 Desc ip i e S a is ics
Table 3 is p esen ing he desc ip i e s a is ics o he a iables o ou s udy sample. The
mean e enue alue is 13.81, indica ing ha mos o he i ms a e ea ning subs an ial
e enue as he e enue alue anges om 0 o 20, he minimum o 0 indica es some i ms
ha e no e enue in ce ain yea s. The s anda d de ia ion o 2.88 deno es li le a ia ion
ac oss i ms, and he alues a e concen a ed a ound he mean.
ESG, Co po a e Financial Pe o mance and Cash Holdings
592
cash ese es can be e manage he cos s ela ed o ESG ac i i ies, mi iga e he impac on
p o i abili y, and enhance e enue gene a ion. Indeed, his highligh s he impo ance o
inancial lexibili y because o he mos liquid asse (cash holdings) in implemen ing
sus ainable business p ac ices. Resul s o his esea ch a e consis en wi h s akeholde
heo y, as by in es ing in ESG p ac ices, i ms gain cus ome loyal y and goodwill, which
leads o highe sales, bu p o i abili y may lag unless suppo ed by esou ces (cash
holdings).
Rega ding policy implica ions, his s udy sugges s ha egula o y bodies should conside
implemen ing o enhancing manda o y epo ing s anda ds, as anspa en epo ing can
help in es o s make in o med decisions and a ain mo e sus ainable in es men s.
Rega ding implica ions o manage s, his s udy highligh s he incen i es o co po a e
manage s o main ain su icien cash ese es. Secondly, i ms should adop go e nance
policies ha balance sho - un inancial goals wi h long- un sus ainabili y objec i es.
Thi d, ac i e engagemen wi h s akeholde s (including cus ome s, employees, in es o s,
and socie y a la ge) on ESG issues can help o align business s a egies wi h socie al
expec a ions, ul ima ely leading o inc eased e enue and long- e m success. Policymake s
and co po a e leade s, by wo king oge he , can c ea e an en i onmen ha balances
sus ainable p ac ices and p o i abili y wi h b oad social and en i onmen al goals.
Despi e o e ing no el insigh s in o he a ea o ESG, inancial pe o mance, and cash
holdings, his esea ch is no wi hou limi a ions. Cu en esea ch is based on agg ega e
sco es o each dimension o ESG: en i onmen , social, and go e nance. Fo example, he
en i onmen al sco e is a weigh ed a e age o a ious en i onmen al sub-indica o s, such
as emission managemen , enewable ene gy adop ion, wa e managemen , in es men in
g een R&D, and eco- iendly p oduc designs. Fu u e esea ch s udies could conside
speci ic sub-dimensions, e.g., emission managemen o sus ainable sou cing, and
in es men in g een R&D o iden i y which aspec could ha e a s ong in luence.
Fu he mo e, a compa ison be ween eme ging ma ke s and de eloped ma ke s o high- ech
indus ies and adi ional manu ac u ing sec o s could be conside ed o u u e esea ch.
Resea ch Funding
The au ho s ecei ed no esea ch g an o suppo o his esea ch s udy.
REFERENCES
Ahmad, N., Moba ek, A., & Roni, N. N. (2021). Re isi ing he impac o ESG on inancial
pe o mance o FTSE350 UK i ms: S a ic and dynamic panel da a analysis. Cogen
Business & Managemen , 8(1), 1900500. h ps://doi.o g/10.1080/23311975.2021.1900500
Ahmed, O., & Abu Khala , B. (2025). The impac o ESG on i m alue: The mode a ing
ole o cash holdings. Heliyon, 11(2), e41868.
h ps://doi.o g/10.1016/j.heliyon.2025.e41868
Hamid & Shea
593
Al Amosh, H., Kha ib, S. F. A., & Ananzeh, H. (2024). Te o is a acks and en i onmen al
social and go e nance pe o mance: E idence om c oss-coun y panel da a. Co po a e
Social Responsibili y and En i onmen al Managemen , 31(1), 210-223.
h ps://doi.o g/10.1002/cs .2563
Ala eeni, B. A., & Hamdan, A. (2020). ESG impac on pe o mance o US S&P 500-lis ed
i ms. Co po a e Go e nance: The In e na ional Jou nal o Business in Socie y, 20(7),
1409-1428. h ps://doi.o g/10.1108/CG-06-2020-0258
Albi a , K., Hussainey, K., Kolade, N., & Ge ged, A. M. (2020). ESG disclosu e and i m
pe o mance be o e and a e IR: The mode a ing ole o go e nance mechanisms.
In e na ional Jou nal o Accoun ing & In o ma ion Managemen , 28(3), 429-444.
h ps://doi.o g/10.1108/IJAIM-09-2019-0108
A an, R., Alam, Md. M., Said, J., & Zam i, M. (2018). The impac s o en i onmen al,
social, and go e nance ac o s on i m pe o mance: Panel s udy o Malaysian companies.
Managemen o En i onmen al Quali y: An In e na ional Jou nal, 29(2), 182-194.
h ps://doi.o g/10.1108/MEQ-03-2017-0033
Bacha, S., Ajina, A., & Ben Saad, S. (2020). CSR pe o mance and he cos o deb : Does
audi quali y ma e ? Co po a e Go e nance: The In e na ional Jou nal o Business in
Socie y, 21(1), 137-158. h ps://doi.o g/10.1108/CG-11-2019-0335
Bhaska an, R. K., Ting, I. W. K., Sukuma an, S. K., & Sumod, S. D. (2020).
En i onmen al, social and go e nance ini ia i es and weal h c ea ion o i ms: An
empi ical examina ion. Manage ial and Decision Economics, 41(5), 710-729.
h ps://doi.o g/10.1002/mde.3131
Buallay, A., Fadel, S. M., Alajmi, J., & Saudaga an, S. (2020). Sus ainabili y epo ing and
bank pe o mance a e inancial c isis: E idence om de eloped and de eloping
coun ies. Compe i i eness Re iew: An In e na ional Business Jou nal, 31(4), 747-770.
h ps://doi.o g/10.1108/CR-04-2019-0040
Campello, M., G aham, J. R., & Ha ey, C. R. (2010). The eal e ec s o inancial
cons ain s: E idence om a inancial c isis. Jou nal o Financial Economics, 97(3), 470-
487. h ps://doi.o g/10.1016/j.j ineco.2010.02.009
Ca nini Pulino, S., Ciabu i, M., Magnanelli, B. S., & Nas a, L. (2022). Does ESG
Disclosu e In luence Fi m Pe o mance? Sus ainabili y, 14(13), 7595.
h ps://doi.o g/10.3390/su14137595
Cek, K., & Eyupoglu, S. (2020). Does en i onmen al, social and go e nance pe o mance
in luence economic pe o mance? Jou nal o Business Economics and Managemen , 21(4),
1165-1184. h ps://doi.o g/10.3846/jbem.2020.12725
ESG, Co po a e Financial Pe o mance and Cash Holdings
594
Chang, C.-C., & Tang, H.-W. (2021). Co po a e cash holdings and o al ac o p oduc i i y
- A global analysis. The No h Ame ican Jou nal o Economics and Finance, 55, 101316.
h ps://doi.o g/10.1016/j.naje .2020.101316
Chang, C.-C., & Yang, H. (2022). The ole o cash holdings du ing inancial c ises. Paci ic-
Basin Finance Jou nal, 72, 101733. h ps://doi.o g/10.1016/j.pac in.2022.101733
Chen, H., Yang, D., Zhang, J. H., & Zhou, H. (2020). In e nal con ols, isk managemen ,
and cash holdings. Jou nal o Co po a e Finance, 64, 101695.
h ps://doi.o g/10.1016/j.jco p in.2020.101695
Dai, J., Can o , D. E., & Mon abon, F. L. (2017). Examining co po a e en i onmen al
p oac i i y and ope a ional pe o mance: A s a egy-s uc u e-capabili ies-pe o mance
pe spec i e wi hin a g een con ex . In e na ional Jou nal o P oduc ion Economics, 193,
272-280. h ps://doi.o g/10.1016/j.ijpe.2017.07.023
Donaldson, T., & P es on, L. E. (1995). The S akeholde Theo y o he Co po a ion:
Concep s, E idence, and Implica ions. Academy o Managemen Re iew, 20(1), 65-91.
h ps://doi.o g/10.2307/258887
Fa ooq, O. (2015). Financial Cen e s And The Rela ionship Be ween ESG Disclosu e And
Fi m Pe o mance: E idence F om An Eme ging Ma ke . Jou nal o Applied Business
Resea ch, 31(4), 1239–1244. h ps://doi.o g/10.19030/jab . 31i4.9298
Fa emi, A., Glaum, M., & Kaise , S. (2018). ESG pe o mance and i m alue: The
mode a ing ole o disclosu e. Global Finance Jou nal, 38, 45-64.
h ps://doi.o g/10.1016/j.g j.2017.03.001
F eeman, R. E. (1984). S a egic managemen : A s akeholde app oach. Bos on,
Massachuse s: Pi man.
Gong, G., Deng, Q., Gong, X., Liu, W., & Ren, Q. (2018). A new double lexible job-shop
scheduling p oblem in eg a ing p ocessing ime, g een p oduc ion, and human ac o
indica o s. Jou nal o Cleane P oduc ion, 174, 560-576.
h ps://doi.o g/10.1016/j.jclep o.2017.10.188
Go indan, K., Kaliyan, M., Kannan, D., & Haq, A. N. (2014). Ba ie s analysis o g een
supply chain managemen implemen a ion in Indian indus ies using analy ic hie a chy
p ocess. In e na ional Jou nal o P oduc ion Economics, 147, 555-568.
h ps://doi.o g/10.1016/j.ijpe.2013.08.018
G oening, C., Sa kis, J., & Zhu, Q. (2018). G een ma ke ing consume -le el heo y e iew:
A compendium o applied heo ies and u he esea ch di ec ions. Jou nal o Cleane
P oduc ion, 172, 1848-1866. h ps://doi.o g/10.1016/j.jclep o.2017.12.002
Guizani, M. (2017). The inancial de e minan s o co po a e cash holdings in an oil ich
coun y: E idence om Kingdom o Saudi A abia. Bo sa Is anbul Re iew, 17(3), 133-143.
h ps://doi.o g/10.1016/j.bi .2017.05.003
Hamid & Shea
595
Ja adi, S., Mollagholamali, M., Nejadmalaye i, A., & Al-Thaqeb, S. (2021). Co po a e
cash holdings, agency p oblems, and economic policy unce ain y. In e na ional Re iew o
Financial Analysis, 77, 101859. h ps://doi.o g/10.1016/j.i a.2021.101859
Khan, U., & Liu, W. (2023). The link be ween g een inno a ions, co po a e pe o mance,
ESG ac i i ies, and sha ing economy. En i onmen al Science and Pollu ion Resea ch,
30(32), 78763-78775. h ps://doi.o g/10.1007/s11356-023-27722-7
Kim, C.-S., Maue , D. C., & She man, A. E. (1998). The de e minan s o co po a e
liquidi y: Theo y and e idence. Jou nal o Financial and Quan i a i e Analysis, 33(3),
335-359. h ps://doi.o g/10.2307/2331099
Kim, E.-H., & Lyon, T. P. (2015). G eenwash s. B ownwash: Exagge a ion and Undue
Modes y in Co po a e Sus ainabili y Disclosu e. O ganiza ion Science, 26(3), 705-723.
h ps://doi.o g/10.1287/o sc.2014.0949
Lee, B. S., & Suh, J. (2011). Cash holdings and sha e epu chases: In e na ional e idence.
Jou nal o Co po a e Finance, 17(5), 1306-1329.
h ps://doi.o g/10.1016/j.jco p in.2011.06.006
Li, Y., Gong, M., Zhang, X.-Y., & Koh, L. (2018). The impac o en i onmen al, social,
and go e nance disclosu e on i m alue: The ole o CEO powe . The B i ish Accoun ing
Re iew, 50(1), 60-75. h ps://doi.o g/10.1016/j.ba .2017.09.007
Lo, S.-F., & Sheu, H.-J. (2007). Is Co po a e Sus ainabili y a Value-Inc easing S a egy o
Business? Co po a e Go e nance: An In e na ional Re iew, 15(2), 345-358.
h ps://doi.o g/10.1111/j.1467-8683.2007.00565.x
Lozano, M. B., & Yaman, S. (2020). The Eu opean Financial C isis and Fi ms' Cash
Holding Policy: An Analysis o he P ecau iona y Mo i e. Global Policy, 11(S1), 84-94.
h ps://doi.o g/10.1111/1758-5899.12768
Me ca an i, A., Mäkinen, T., & Sil es ini, A. (2019). The ole o inancial ac o s o
Eu opean co po a e in es men . Jou nal o In e na ional Money and Finance, 96, 246-258.
h ps://doi.o g/10.1016/j.jimon in.2019.05.006
Mille , M. H., & O , D. (1966). A Model o he Demand o Money by Fi ms. The
Qua e ly Jou nal o Economics, 80(3), 413-435. h ps://doi.o g/10.2307/1880728
Nguyen, T. N., & Nguyen, C. T. (2020). Fi m pe o mance: The mode a ion impac o deb
and di idend policies on o e in es men . Jou nal o Asian Business and Economic S udies,
28(1), 47-63. h ps://doi.o g/10.1108/JABES-12-2019-0128
O li zky, M. (2013). Co po a e Social Responsibili y, Noise, and S ock Ma ke Vola ili y.
Academy o Managemen Pe spec i es, 27(3), 238-254.
h ps://doi.o g/10.5465/amp.2012.0097
ESG, Co po a e Financial Pe o mance and Cash Holdings
596
Ragha an, K. (2022). ESG Repo ing Impac on Accoun ing, Finance. Jou nal o Global
Awa eness, 3(1) A icle 9. h ps://doi.o g/10.24073/jga/3/01/09
Rau , R. K., Shas i, N., Mish a, A. K., & Tiwa i, A. K. (2023). In es o 's alues and
in es men decision owa ds ESG s ocks. Re iew o Accoun ing and Finance, 22(4), 449-
465. h ps://doi.o g/10.1108/RAF-12-2022-0353
Saygili, E., A slan, S., & Bi kan, A. O. (2022). ESG p ac ices and co po a e inancial
pe o mance: E idence om Bo sa Is anbul. Bo sa Is anbul Re iew, 22(3), 525-533.
h ps://doi.o g/10.1016/j.bi .2021.07.001
Se a eim, G., & G ewal, J. (2017). The Value Rele ance o Co po a e Sus ainabili y
Disclosu es: An Analysis o a Da ase om One La ge Asse Owne (SSRN Schola ly
Pape 2966767). h ps://doi.o g/10.2139/ss n.2966767
Smi h, C. W., & Wa s, R. L. (1992). The in es men oppo uni y se and co po a e
inancing, di idend, and compensa ion policies. Jou nal o Financial Economics, 32(3),
263-292. h ps://doi.o g/10.1016/0304-405X(92)90029-W
S e an, A., & Paul, L. (2008). Does I Pay o Be G een? A Sys ema ic O e iew. Academy
o Managemen Pe spec i es, 22(4), 45-62. h ps://doi.o g/10.5465/amp.2008.35590353
Sub amaniam, V., Tang, T. T., Yue, H., & Zhou, X. (2011). Fi m s uc u e and co po a e
cash holdings. Jou nal o Co po a e Finance, 17(3), 759-773.
h ps://doi.o g/10.1016/j.jco p in.2010.06.002
Wang, Y., & Wang, X. (2024). F om a ings o ac ion: The impac o ESG pe o mance on
co po a e inno a ion. Heliyon, 10(4), e26683.
h ps://doi.o g/10.1016/j.heliyon.2024.e26683
Wu, L., Lam, J. F. I., & Liu, Y. (2024). Can semi-manda o y non- inancial disclosu e
equi emen s d i e i ms o imp o e ESG pe o mance-E idence om Chinese lis ed
companies. Heliyon, 10(14), e34235. h ps://doi.o g/10.1016/j.heliyon.2024.e34235
Xu, J., & Li, J. (2022). The in e ela ionship be ween in ellec ual capi al and i m
pe o mance: E idence om China's manu ac u ing sec o . Jou nal o In ellec ual Capi al,
23(2), 313-341. h ps://doi.o g/10.1108/JIC-08-2019-0189
Yang, D., Jiang, W., & Zhao, W. (2019). P oac i e en i onmen al s a egy, inno a ion
capabili y, and s akeholde in eg a ion capabili y: A media ion analysis. Business S a egy
and he En i onmen , 28(8), 1534-1547. h ps://doi.o g/10.1002/bse.2329
Yoon, B., Lee, J. H., & Byun, R. (2018). Does ESG Pe o mance Enhance Fi m Value?
E idence om Ko ea. Sus ainabili y, 10(10), 3635. h ps://doi.o g/10.3390/su10103635
Yuan, L., No , M. N. M., & Kadi , D. A. (2025). G een cash low: How ESG pe o mance
shapes co po a e cash holding s a egies. F on ie s in Sus ainabili y, 6, 1531206.
h ps://doi.o g/10.3389/ sus.2025.1531206
Hamid & Shea
597
Zahid, R. M. A., Khan, M. K., Anwa , W., & Maqsood, U. S. (2022). The ole o audi
quali y in he ESG-co po a e inancial pe o mance nexus: Empi ical e idence om
Wes e n Eu opean companies. Bo sa Is anbul Re iew, 22, S200-S212.
h ps://doi.o g/10.1016/j.bi .2022.08.011
Zhang, D., & Lucey, B. M. (2022). Sus ainable beha io s and i m pe o mance: The ole
o inancial cons ain s' alle ia ion. Economic Analysis and Policy, 74, 220-233.
h ps://doi.o g/10.1016/j.eap.2022.02.003
Zhu, Y., Sun, L.-Y., & Leung, A. S. M. (2014). Co po a e social esponsibili y, i m
epu a ion, and i m pe o mance: The ole o e hical leade ship. Asia Paci ic Jou nal o
Managemen , 31(4), 925-947. h ps://doi.o g/10.1007/s10490-013-9369-1
