This study examines the relationship between environmental, social, and governance (ESG) practices and firm value in Vietnam, with a specific focus on the moderating role of profitability. Using a panel dataset of publicly listed Vietnamese companies between 2014 and 2023, the study applies the Feasible Generalized Least Squares (FGLS) method to address potential heteroscedasticity and autocorrelation issues. The findings indicate that ESG engagement has a generally positive impact on firm value, measured by Tobin’s Q.; however, this effect varies significantly across firms depending on their profitability levels. Firms with higher profitability benefit more from ESG practices, while those with low profitability experience weaker or neutral effects. This suggests that financial health plays a critical role in shaping the outcomes of ESG adoptions. This study contributes to the growing ESG literature in emerging markets by highlighting how internal financial capacity affects the effectiveness of sustainability strategies. It also provides practical implications for managers and policymakers seeking to align ESG initiatives with value-creation goals.
Nguyen et al. (2025) studied this question.