This study aims to analyse the relationship between geopolitical risk (GPR) and accounting-based firm performance (FP), with a focus on moderating role of Environmental, Social and Governance (ESG) aspect.
Using data from 2,280 firm-year observations of 228 energy sector firms listed among S&P top 250 between 2013 and 2022, this study uses ordinary least square regression to analyse the influence of GPR on FP. The study further used system generalized method of moment to address the endogeneity to check the robustness of the result.
Findings of this study show that GPR has a significant negative impact on FP of energy firms, confirming the moderating role of ESG in this relationship. This study contributes to current research by giving a view of how ESG affect GPR–FP relationship. It also provides useful insights for managers, policymakers and stakeholders, stressing the importance of taking ESG into account when developing sustainability initiatives in the energy sector.
To the best of the authors’ knowledge, this study is first in the literature to explicitly account for the role of relatedness of ESG in relationship between GPR and FP in energy sector.
