The Impact of Corporate ESG Performance on Financial Performance: An Empirical Analysis Based on U.S. Technology Companies

Abstract

This study examines the impact of Environmental (E), Social (S), and Governance (G) (ESG.) performance on the financial profitability of U.S. technology companies. Based on stakeholder theory, the resource-based view, and the shareholder value perspective, this paper analyzes how ESG activities may create strategic opportunities for firms while also potentially incurring short-term costs. Using panel data from publicly listed United States technology companies and employing a fixed-effects regression model, the paper tests the relationship between ESG scores and return on assets (ROA). The empirical results show a significant negative correlation between environmental performance and profitability, supporting the shortterm “cost effect” hypothesis, while the impacts of the social and governance dimensions are not significant. By adopting robustness checks with comprehensive ESG scores and balanced panel data, the study further validates the reliability of the conclusions. This research enriches the literature on the relationship between ESG and financial performance, particularly from the perspective of the technology sector, emphasizing the importance of ESG issues such as carbon emissions and data security. The findings provide theoretical and practical insights for managers, investors, and policymakers when balancing sustainable investment with financial performance.