The Impact of ESGE Performance on Financial Performance in Germany : A Time-Lagging and Curvilinear Approach

Based on the stakeholder-agency theory, this study empirically investigates the impact of environmental, social, governance, and sustainable economic performance (ESGEP) on financial performance (FP). We rely on a sample from the German DAX30, MDAX, and TecDAX stock indices from 2008 to 2017. In contrast to former studies that tested a direct linear relationship between ESGEP and FP, a time-lagging and curvilinear regression analysis was carried out, and evidence of a U-shaped impact of ESGEP on FP was found. This finding challenges corporate sustainability management oriented toward increasing FP to improve ESGEP substantially rather than incrementally