Paper title: The Impact of Corporate Sustainability on Financial Performance: Examining the Moderating Role of Capital Intensity
Abstract: This study investigates the relationship between corporate sustainability performance and firm financial performance while focusing on the moderating role of the capital intensity of firms. Using a comprehensive dataset of 1,807 U.S. firms from the Russell 3000 Index over the period 2012-2022, this research employs panel data methodologies, including fixed effects models and two-stage least squares (2SLS) analysis with instrumental variables, to address potential endogeneity concerns. The findings of this study reveal a positive relationship between sustainability performance (as measured through ESG scores) and firm financial performance (as measured through ROA), supporting the "business case" for sustainability. Moreover, capital intensity is found to moderate the ESG-ROA relationship negatively. Importantly, these results are robust to multiple model specifications and estimation techniques, reinforcing the reliability of the findings. Keywords: Corporate Sustainability, Financial Performance, ESG, Industry Competition, Capital Intensity, Employee Productivity. DOI: https://www.doi.org/10.61607/JFB.V21N1-2.A3 Article Info: Submission Date: July 11, 2024; Acceptance Date: November 07, 2024.
