Purpose The purpose of this study is to examine the direct effects of firms’ governance on financial, environmental and social performance and investigate how governance moderates the relationship between financial and non-financial performance. Design/methodology/approach The authors performed the panel data regressions using a sample of 207 listed firms from five GCC countries, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, over the period from 2015 to 2022. Findings Governance positively impacts financial, environmental and social performance. Importantly, the results of this study document a positive moderation effect of governance on the relationship between a firm’s non-financial and financial performance, such that the firm’s environmental and social performance positively affect financial performance for firms with better governance. Practical implications Strengthening corporate governance can provide direct financial benefits to firms while also improving the financial feasibility of their environmental and social initiatives. The findings of this research also hold value for policymakers and practitioners, as they highlight the value of regulations and reforms in making business operations more sustainable. Social implications The findings of this research recommend enhancing governance in firms to improve the environmental and social initiatives that aspire to be in tune with the needs of the times. Originality/value This research is a first step in gauging the impacts of corporate governance for markets where business activities pose a significant amount of environmental risk.
Tauseef et al. (Sat,) studied this question.