ESG and performance in public health-care companies: the role of disclosure and director liability

The seepage of companies' capital accommodated by weak country-level institutions is inconducive to building sustainable businesses. Companies' performance on environmental, social and governance (ESG) issues is still a challenging question. This study aims to test the predictability of ESG on the performance of the health-care industry from a global perspective, while accounting for the country disclosure and director liability indices and performing robustness tests.

This study relies on panel data of 912 companies operating in 38 different countries for 2012–2020. This study controls for firm-level variables (leverage, size and loss), macroeconomic variables (COVID, gross domestic product and inflation) and institutional variables.

Findings indicate that countries with different levels of disclosure exhibit different patterns. Distinctly, the environmental pillar has a concave impact on return on assets, and the role of the disclosure index greatly manifests with the environmental pillar.

This study ponders the impact of country disclosure on sustainability practices from a global health-care perspective.

This paper is original, as it addresses the relationship between ESG performance and financial performance while accounting for the impact of institutional factors such as the business disclosure and director liability indices.