Corporate Sustainable Performance and Profitability: Exploring the Moderating Role of Liquidity and Stock Volatility in Egypt

Abstract

Purpose: The purpose of this study is to investigate whether Corporate sustainable performance (CSP) impacts the firm profitability by exploring the moderating role of liquidity and stock volatility in Egypt.

Design/methodology/approach: The study sample covers the 30 listed firms in S&P/EGX -ESG from 2010 to 2022. Data analyzed using the regression. Two regression models were estimated, the first model used the CSP as an independent variable measured by ESG scores disclosures, while CSP was measured in the second model using the intensity index. Firm profitability was measured by ROA as a dependent variable in the first model in the second model firm profitability was measured by ℓ𝓃 ROA.

Research limitations/implications: This study is limited to the context of Egypt; however, it provides insights to policymakers, managers, and investors to adopt sustainability as an integral part of their decision-making process due to its positive impact on firms’ profitability.

Findings : Results demonstrated that there is a positive significant impact between corporate sustainable performance and firm profitability. Furthermore, empirical data indicated that companies that display a high degree of commitment to sustainable practices and aggressively pursue admission into the sustainability index tend to earn the highest level of profitability.

Originality/value : The study renders a vision of the role of CSP on firm performance. This study tries to determine whether there is a relationship between CSP and profitability in the context of Egypt, and if they are positive, negative, or even neutral by exploring the moderating role of liquidity and stock volatility.