Do sustainability theories hold empirically? Evidence from a theory-driven systematic review of ESG and sustainability finance

This study evaluates the empirical validity of seven influential sustainability theories, Stakeholder Theory, Legitimacy Theory, Institutional Theory, Agency Theory, the Resource-Based View, Dynamic Capabilities Theory, and Signaling Theory, within finance- and economics-oriented environmental, social, and governance (ESG) research. A theory-driven systematic review was conducted using Scopus and Web of Science and reported in accordance with PRISMA 2020. The final corpus comprised 67 peer-reviewed empirical studies. Each study was coded according to its focal theory, ESG operationalisation, financial outcome channel, methodological design, mechanism, and boundary conditions, and the evidence was classified as supported, partially supported, mixed, or contradicted using predefined adjudication rules. The findings reveal substantial variation in empirical support across theories. Agency Theory records the strongest within-corpus consistency, with all ten studies supporting its governance, monitoring, and incentive-alignment mechanisms. Legitimacy Theory and the Resource-Based View also receive strong support, particularly where substantive disclosure practices or embedded organisational resources are connected to financial outcomes. Stakeholder and Institutional theories show moderate and context-dependent support, whereas Signaling Theory and Dynamic Capabilities Theory produce weaker and more heterogeneous evidence. The explanatory strength of each theory varies across ESG measurement approaches, financial outcome channels, institutional settings, and methodological designs. Disclosure credibility is particularly important for signaling and legitimacy mechanisms, while capability-based explanations are stronger when ESG is measured through operational performance rather than disclosure alone. The study contributes a comparative theory-adjudication framework that moves beyond routine theory citation by identifying the mechanisms, outcome channels, and boundary conditions under which sustainability theories receive empirical support.