Vision 2030 in action: how ESG disclosure shape financial performance in Saudi Arabia

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:This study offers an empirical test of agency and stakeholder theories in an Islamic finance context, with implications for ESG research in emerging markets.

🏢実務担当者:Corporate sustainability teams can learn how governance mechanisms may enhance the financial benefits of ESG activities, though direct effects may vary.

🏛政策担当者:Policymakers can note that governance quality is crucial for translating ESG disclosure into performance, which is relevant for designing disclosure frameworks.

This study aims to examine the relationship between environmental, social and governance (ESG) and financial performance across non-financial firms listed on the Saudi Stock Exchange (Tadawul). It employs the lens of agency theory and stakeholder theory in order to understand the impact of ESG dimensions on financial performance. We examine non-financial companies listed on Tadawul between 2019 and 2023, focusing on 33 firms with 165 firm-year observations. The analysis uses a variety of econometric methods such as ordinary least squares, random effects, robust regression and Tobit models for the period of 2019–2023. The results indicated that robust corporate governance practices were statistically significant and positive mediating effect. However, the relationship between ESG disclosure and return on assets (ROA) is inconsistent. This advises that effective governance mechanisms enhance the translation of ESG activities into improved ROA. Using robustness checks, this paper employ return on equity and earnings per share as alternative performance measures to validate these results. These insights offer actionable implications for firms, policymakers and investors in Saudi Arabia by demonstrating the impact of ESG dimensions on financial performance. This can be achieved through the enhancement to economic performance, attract foreign investment and foster sustainable development. These insights offer actionable implications for firms, policymakers and investors in Saudi Arabia by demonstrating the impact of ESG dimensions on financial performance. This can be achieved through the enhancement to economic performance, attract foreign investment and foster sustainable development. This study contributes to the corporate governance literature by empirically demonstrating the mediating role of governance (via principal component analysis-composited mechanisms) in translating ESG into financial benefits, refining agency and stakeholder theories in an Islamic finance-influenced emerging market. It provides novel insights into how Vision 2030's sustainability push interacts with governance to drive performance, bridging conflicting literature, and offers a methodological template for ESG research in similar contexts.

• semanticscholar https://doi.org/10.1108/msar-06-2025-0222first seen 2026-07-18 07:34:11