Corporate sustainability practices and financial performance: The moderating role of corporate controversies and Shariah screening

This study examines the effects of corporate sustainability practices (CSP) on corporate financial performance (CFP). The study also examines the moderating role of corporate controversies and shariah compliance on the CSP‐CFP relationship. The results support the positive relationship between CSP and CFP. The study also finds that corporate controversies have a negative impact on financial performance and a negative moderating role on the CSP‐CFP relationship. This study also finds that Shariah compliance has a positive moderating role but loses its power when interacting with corporate controversies in influencing the impact of the CSP‐CFP relationship. An important implication of this study is that firms affected by controversy must find ways to mitigate the negative impact.