Journal of Economics and Management Volume 21, No. 1 March, 2025

The Association Between Different Control Types, ESG Implementation Effectiveness, and Financial Performance

Shih-Wei Hung

Department of Money and Banking, National Kaohsiung University of Science and Technology, Taiwan

Shen-Yuan Chen

Department of Finance, National Taipei University of Business, Taiwan

Ming-Chuan Wang

School of Accounting and Finance, National Taipei University of Business, Taiwan

Abstract

We investigate the relationship among control types, ESG (environmental, social, and governance) performance, and financial performance. Our sample is categorized into family-controlled, jointly-controlled, professionally managed, and government-owned firms. Results show that government-owned and professionally managed firms exhibit superior ESG performance compared to other types. However, the relationship between ESG and financial performance is nuanced. While better ESG performance generally enhances financial outcomes, this effect is nonlinear, suggesting diminishing returns from overinvestment in ESG. Despite this strong ESG performance, government-owned firms do not always translate this into superior financial performance, highlighting the complex relationship between ESG investment and financial outcomes.

Keywords：Control Types, ESG, Financial Performance, Nonlinear, Overinvest

JEL Classifications：G30, H10, M41

BACK