This study investigated the relationship between environmental, social, and governance (ESG) disclosure and the performance of Saudi Arabian companies. We analysed panel data from the 100 non-financial companies listed on the Saudi stock exchange (Tadawul) from 2017 to 2022. Using fixed effects, random effects, and generalised method of moments (GMM) models to account for endogeneity concerns, we examined the impact of ESG disclosure on the return on assets (ROA), return on equity (ROE), and Tobin’s Q. An ESG index was constructed through a principal component analysis of individual environmental, social, and governance scores. Our results indicate a significant positive relationship between ESG disclosure and companies’ key performance variables across all models. These findings are consistent with stakeholder theory and signalling theory, suggesting that comprehensive ESG practices can lead to better financial performance and serve as a positive signal to stakeholders. The study also reveals sector-specific differences, with non-manufacturing firms showing stronger positive relationships between ESG disclosure and performance measures compared to manufacturing firms. Additionally, we find that firm size, age, and liquidity are important factors influencing the ESG–performance relationship. This research contributes to the growing literature on ESG and corporate performance in emerging markets, offering valuable insights for policymakers, investors, and corporate practitioners in Saudi Arabia’s evolving sustainable business landscape. Our findings underscore the importance of ESG disclosure in driving sustainable and responsible business practices in the region.

This study investigated the relationship between environmental, social, and governance (ESG) disclosure and the performance of Saudi Arabian companies. We analysed panel data from the 100 non-financial companies listed on the Saudi stock exchange (Tadawul) from 2017 to 2022. Using fixed effects, random effects, and generalised method of moments (GMM) models to account for endogeneity concerns, we examined the impact of ESG disclosure on the return on assets (ROA), return on equity (ROE), and Tobin’s Q. An ESG index was constructed through principal component analysis of individual environmental, social, and governance scores. Our results indicate a significant positive relationship between ESG disclosure and companies’ key performance variables across all models. These findings are consistent with stakeholder theory and signalling theory, suggesting that comprehensive ESG practices can lead to better financial performance and serve as a positive signal to stakeholders. The study also reveals sector-specific differences, with non-manufacturing firms showing stronger positive relationships between ESG disclosure and performance measures compared to manufacturing firms. Additionally, we find that firm size, age, and liquidity are important factors influencing the ESG–performance relationship. This research contributes to the growing literature on ESG and corporate performance in emerging markets, offering valuable insights for policymakers, investors, and corporate practitioners in Saudi Arabia’s evolving sustainable business landscape. Our findings underscore the importance of ESG disclosure in driving sustainable and responsible business practices in the region.

This study examines the impact of environmental, social, and governance (ESG) disclosures on the value of non-financial firms listed on the Saudi Stock Exchange (Tadawul) from 2017 to 2022. It explores how ESG practices influence firm profitability and market valuation. Using earnings per share (EPS) and Tobin’s Q as firm value indicators, the study analyses 100 firms. To address endogeneity concerns, it applies the generalized method of moments (GMM). The study also examines the moderating role of firm size in ESG disclosure and performance. The results indicate that increased ESG disclosure enhances firm value, with environmental and governance factors playing a key role. Firm size, return on assets (ROA), and debt-to-equity ratio significantly impact performance. Larger firms exhibit better ESG practices, leading to higher earnings per share. This study confirms the positive relationship between ESG disclosure and firm value, emphasizing environmental and governance aspects. Firm size is a crucial factor influencing ESG adoption and financial outcomes. The study recommends mandatory ESG disclosure frameworks, sector-specific regulations, and incentives to enhance corporate transparency and sustainability. These measures can strengthen firms' market competitiveness and align them with Saudi Arabia’s Vision 2030.