This paper is interested in examining the impact of corporate social responsibility and governance on corporate financial performance. We selected a panel of 141 worldwide hospitality and tourism firms spanning the period 2012–2018 to assess the effects (direct and indirect) of corporate social responsibility and governance on corporate financial performance (measured in terms of return on assets, return on equity and Tobin’s Q). Although a few studies examine the moderating effect of certain factors, our study fills this gap by examining the moderating effect of governance practices (governance structure and institutional quality) on the nonlinear relationship between corporate social responsibility and corporate financial performance. The results of the system generalized method of moments suggest the existence of a nonlinear, U-shaped relationship between corporate social responsibility and corporate financial performance (return on equity and Tobin’s Q). This nonlinearity is confirmed for corporate social responsibility and corporate financial performance (measured by return on assets). However, this relationship is inverted-U-shaped. Furthermore, our results also show that lagged corporate social responsibility, governance practices, firm-specific variables and macroeconomic variables affect current corporate financial performance. The predictions of stakeholders and agency theories are validated. Given our results, it is recommended that policy makers trade off the benefits and costs of corporate social responsibility and take appropriate financial strategies, thus enabling value creation for their companies.

Although the relationship between ESG performance and firm performance has been the subject of several studies, the nonlinear relationship between ESG performance and the corporate performance of insurance companies remains less explored, specifically in the Middle East, North Africa, and Turkey (MENAT) region. Moreover, the moderating effect of institutional quality on this relationship has not been examined. To fill this gap, this paper investigates the nonlinear impact of ESG performance on the financial performance of insurance companies in the MENAT region, as well as the moderating effect of institutional quality. To achieve this, a sample of 31 insurance companies located in the seven MENAT countries was constructed over the period 2017–2022. The sample was selected based on the completeness and availability of ESG-related data. This ensured a standardized dataset to enhance the reliability of the results. To estimate this relationship, the System Generalized Method of Moments (SGMM) was used. This technique was used to address endogeneity issues. The empirical results indicate that the performance of the insurance companies is better for those with better ESG performance. Moreover, the quality of institutions is an even more important factor in enhancing the ESG practices–corporate performance nexus. More in-depth analysis is needed to show how these various relationships might be altered with ESG criteria. The findings of this research would, therefore, be beneficial to insurers in terms of an increased understanding of how effective integration of ESG practices, both at the institutional and company level, could be streamlined to enhance their long-term competitiveness and profitability.

This study examines the nonlinear connection between audit quality and insurance firm ESG performance based on a sample of 31 MENAT-region insurance companies from 2017 to 2022. Based on a fixed-effect model and quadratic regression, the main results support the presence of a curvilinear nexus between audit quality and ESG performance of insurance companies. This correlation shifts from positive to negative when it reaches a level of 51,7%. Given this, insurers and regulatory bodies should adjust audit quality to a balanced point where it optimizes ESG performance without excesses that would be needlessly costly and have reverse effects. Policy wise, proportionate rules should be established for the inclusion of ESG considerations in auditing, to prevent over-regulation and to achieve a balance between control and performance.