Volume 12, Issue 9 (September 2025), Pages: 79-89

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 Original Research Paper

The influence of environmental, social, and governance factors on firm performance: Earnings quality as a moderator

 Author(s): 

 Pakkamon Charoensuk, Chaimongkol Pholkaew *, Kusuma Dampitakse

 Affiliation(s):

 Faculty of Business Administration, Rajamangala University of Technology Thanyaburi, Khlong Hok, Thailand

 Full text

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 * Corresponding Author. 

   Corresponding author's ORCID profile:  https://orcid.org/0000-0001-8269-7531

 Digital Object Identifier (DOI)

  https://doi.org/10.21833/ijaas.2025.09.007

 Abstract

This study investigates the impact of Environmental, Social, and Governance (ESG) factors on firm performance, measured by market performance (Tobin’s Q) and financial performance, with Earnings Quality (EQ) as a moderating variable. The sample includes 208 companies listed on the Stock Exchange of Thailand that remained in the Thailand Sustainability Investment (THSI) index for at least five consecutive years (2018–2022). Partial Least Squares Structural Equation Modeling (PLS-SEM) using SmartPLS software was employed for analysis. The results show that the Social (SOC) Score positively affects Return on Assets (ROA), indicating that social activities may enhance financial performance through increased stakeholder trust. In contrast, the Environmental (ENV) Score negatively affects ROA, suggesting that environmental investments may raise costs without short-term financial returns. The Governance (GOV) Score shows no significant effect on either ROA or Tobin’s Q. EQ plays a significant moderating role by strengthening the positive effect of environmental initiatives on Tobin’s Q, particularly in firms with high EQ, which benefit from improved transparency and investor confidence. These findings support Stakeholder and Agency Theory and highlight the importance of aligning ESG practices with strong financial reporting to promote sustainability and maximize market value.

 © 2025 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license ( http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords

 Environmental factors, Social performance, Governance impact, Earnings quality, Firm performance

 Article history

 Received 19 March 2025, Received in revised form 17 July 2025, Accepted 7 August 2025

 Acknowledgment

No Acknowledgment. 

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Charoensuk P, Pholkaew C, and Dampitakse K (2025). The influence of environmental, social, and governance factors on firm performance: Earnings quality as a moderator. International Journal of Advanced and Applied Sciences, 12(9): 79-89

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 Figures

  Fig. 1   Fig. 2   Fig. 3   Fig. 4

 Tables

  Table 1   

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