Document Type : Research Paper
Authors
1 -Assistant Professor, Department of Accounting, Faculty of Economics and Administrative Science, University of Mazandaran, Babolsar, Iran.
2 Assistant Professor, Department of Accounting, Payame Noor University, Tehran, Iran
3 Assistant professor, Management Department, Faculty of Administrative Sciences and Economics, Arak University, Arak, Iran.
Abstract
This study investigates the impact of Environmental, Social, and Governance (ESG) performance on the financial sustainability of companies listed on the Tehran Stock Exchange from 2018 to 2024, analyzing the moderating role of senior managers' characteristics, particularly overconfidence, using an innovative maximum likelihood-based spatial panel regression approach. In emerging economies like Iran, which face environmental, social, and institutional challenges, ESG performance is considered a key tool for reducing financial risks and enhancing long-term firm stability. Global studies suggest that strong ESG performance can lower financing costs and increase resilience against economic shocks, but findings in emerging markets have been inconsistent, often overlooking spatial effects and the role of managers. The statistical population consists of non-financial listed companies, with a final sample of 125 companies (875 observations) selected based on inclusion and exclusion criteria. Hypothesis testing results indicate that ESG performance positively affects firms' financial sustainability, and this relationship is confirmed when accounting for spatial and regional dependencies. Additionally, managers' overconfidence, as a moderating factor, weakens this positive impact and influences spatial spillover effects. The study emphasizes that enhancing ESG performance can improve the financial stability of firms in emerging economies like Iran, but managers' behavioral biases must be managed to maximize sustainability benefits.
Keywords
- Environmental
- Social and Governance Performance
- Financial Sustainability
- Managers'؛ Characteristics
- Spatial Panel Regression
- Overconfidence
Main Subjects
)