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<p>The study argues that corporations’ financial returns for disclosing ESG information are contingent upon their corporate reputation, and that this&#xa0;moderating effect&#xa0;of corporate&#xa0;reputation is further&#xa0;contingent upon the national culture in which the firm operates. This study examines an unbalanced panel dataset comprising 2799 firm-year observations from 311 cross-country firms spanning the period from 2014 to 2022. The sample was derived from Fortune 500 companies listed as the “World’s Most Admired Companies”. Using the generalized method of moments analysis technique, the study attempts to analyse the three-way interaction among ESG disclosure, corporate reputation, and national culture on firm performance. First, the results confirm a favourable association between ESG disclosures and firm performance. Second, the two-way interaction between ESG disclosure and firm reputation has a positive impact on performance. Third, when considering the three-way interaction of each cultural dimension, firm reputation, and ESG disclosure, the results suggest that low power distance, high future orientation, high gender egalitarianism, high collectivism, and high uncertainty avoidance, along with a firm’s reputation, strengthen the nexus between ESG and financial performance. Finally, the conclusion suggests that policymakers and cross-country regulators understand the importance of national cultural factors in implementing green policies.</p>

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The Impact of Three-Way Interaction Between ESG Disclosure, Corporate Reputation, and National Culture on Firm Performance

  • 期刊论文

  • 发表日期：

    2025年9月25日

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  • Tahira Tariq,
  • Shoaib Aslam,
  • Faisal Qadeer

摘要

The study argues that corporations’ financial returns for disclosing ESG information are contingent upon their corporate reputation, and that this moderating effect of corporate reputation is further contingent upon the national culture in which the firm operates. This study examines an unbalanced panel dataset comprising 2799 firm-year observations from 311 cross-country firms spanning the period from 2014 to 2022. The sample was derived from Fortune 500 companies listed as the “World’s Most Admired Companies”. Using the generalized method of moments analysis technique, the study attempts to analyse the three-way interaction among ESG disclosure, corporate reputation, and national culture on firm performance. First, the results confirm a favourable association between ESG disclosures and firm performance. Second, the two-way interaction between ESG disclosure and firm reputation has a positive impact on performance. Third, when considering the three-way interaction of each cultural dimension, firm reputation, and ESG disclosure, the results suggest that low power distance, high future orientation, high gender egalitarianism, high collectivism, and high uncertainty avoidance, along with a firm’s reputation, strengthen the nexus between ESG and financial performance. Finally, the conclusion suggests that policymakers and cross-country regulators understand the importance of national cultural factors in implementing green policies.