Does the Enhancement of ESG on Operating Performance Rely on the Ownership Stakes Held by Directors and Supervisors?

This study investigates how the equity holdings of directors and supervisors influence the interplay between ESG performance and firms' operational outcomes. Utilizing a panel dataset comprising 773 publicly listed firms in Taiwan from 2017 to 2024, the analysis adopts a lagged structure for all explanatory variables to address information delay concerns. The Panel Smooth Transition Regression (PSTR) model is employed to assess whether the ESG‐performance linkage displays a linear progression or varies based on shifts in insider ownership. The empirical evidence reveals that insider ownership acts as a critical moderator. Specifically, when ownership is relatively low, ESG engagement tends to be negatively associated with operational results. However, beyond a certain ownership threshold, the relationship becomes positive. These findings suggest that the ESG–performance nexus is not uniformly linear but rather contingent upon the degree of board‐level ownership.