A Non-Linear Evidence of Environmental, Social, Governance Performance Feedback and Firm-Level Controversies: Does National Culture and Governance Quality Matter?

This study aims at finding the non-linear impact of environmental, social, governance (ESG) performance feedback on firm-level ESG controversies. Additionally, it investigates whether the country-level national culture and governance quality strengthens or reverses the non-linear associations. My initial findings show an inverse U-shaped impact of firm's ESG performance feedback on its intend to indulge into ESG controversies. Specifically, firms too much below of aspired social ESG performance delves into ESG misconduct than firms who are just below aspired levels. On the contrary, firms with positive ESG performance feedback delve into ESG controversies as predicted. However, the initial inverse U-shaped impact got reversed for negative ESG performance feedback firms under strong institutional quality environment. I observe that each of the nation-level governance quality parameters strongly restrict firm-level ESG controversy intends. The ESG-prone national culture environment specifically individualistic, masculine, high uncertainty avoidance, and indulgent culture countries also mitigates inverse U-shaped findings.