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<p>This study examines the relationship between Environmental, Social, and Governance (ESG) performance and firm profitability among U.S. firms, with a focus on heterogeneity across firms characterized by different dividend policies and CSR governance structures. Using a sample of 6,989 firm-year observations from S&amp;P 500 firms over 2011–2023, the study employs panel data regression models with firm fixed effects and an instrumental variable approach to address potential endogeneity concerns. Overall ESG performance—particularly its environmental and social dimensions—is positively associated with firm profitability, measured by return on assets (ROA). This relationship remains robust after controlling for endogeneity. Firms with CSR committees and differing dividend policies display heterogeneous ESG–profitability patterns, although formal moderation effects of these characteristics are not statistically significant. Additional analyses indicate that higher ESG engagement is associated with stronger innovation capabilities and greater accumulation of intangible assets, alongside governance characteristics such as board independence and gender diversity. This study contributes to the ESG literature by examining how ESG–profitability linkages vary across firms with distinct governance and financial characteristics, moving beyond uniform effect assumptions. The subsample-based approach provides more nuanced insights into ESG and profitability patterns in the U.S. context. The findings suggest that ESG–profitability associations vary across firms depending on their dividend policies and CSR governance structures, highlighting the importance of contextual firm characteristics in shaping ESG-related outcomes. Managers and investors may therefore benefit from considering firm-specific governance and financial profiles when evaluating ESG performance, rather than relying on uniform expectations of ESG-related financial returns.</p>

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When does ESG pay off ? Evidence from U.S. firms with heterogeneous dividend policies and CSR governance

  • 期刊论文

  • 发表日期：

    2026年2月20日

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  • Najoua Talbi

摘要

This study examines the relationship between Environmental, Social, and Governance (ESG) performance and firm profitability among U.S. firms, with a focus on heterogeneity across firms characterized by different dividend policies and CSR governance structures. Using a sample of 6,989 firm-year observations from S&P 500 firms over 2011–2023, the study employs panel data regression models with firm fixed effects and an instrumental variable approach to address potential endogeneity concerns. Overall ESG performance—particularly its environmental and social dimensions—is positively associated with firm profitability, measured by return on assets (ROA). This relationship remains robust after controlling for endogeneity. Firms with CSR committees and differing dividend policies display heterogeneous ESG–profitability patterns, although formal moderation effects of these characteristics are not statistically significant. Additional analyses indicate that higher ESG engagement is associated with stronger innovation capabilities and greater accumulation of intangible assets, alongside governance characteristics such as board independence and gender diversity. This study contributes to the ESG literature by examining how ESG–profitability linkages vary across firms with distinct governance and financial characteristics, moving beyond uniform effect assumptions. The subsample-based approach provides more nuanced insights into ESG and profitability patterns in the U.S. context. The findings suggest that ESG–profitability associations vary across firms depending on their dividend policies and CSR governance structures, highlighting the importance of contextual firm characteristics in shaping ESG-related outcomes. Managers and investors may therefore benefit from considering firm-specific governance and financial profiles when evaluating ESG performance, rather than relying on uniform expectations of ESG-related financial returns.